We-Sell Realty, organized August 1, 2016, is owned and operated by Omar Farah. We-Sell Realty Income Statement August 31, 2016 Sales commissions $140,000 Expenses: Office salaries expense $87,000 Rent expense 18,000 Automobile expense 7,500 Miscellaneous expense 2,200 Supplies expense 1,150 Total expenses 115,850 Net income $25,000 Omar Farah Statement of Owner's Equity August 31, 2015 Omar Farah, capital, August 1, 2016 $0 Less withdrawals during August 10,000 $(10,000) Investment on August 1, 2016 15,000 $5,000 Net income for August 25,000 Omar Farah, capital, August 31, 2016 $30,000 Balance Sheet For the Month Ended August 31, 2016 Assets Liabilities Cash $8,900 Accounts receivable $38,600 Accounts payable 22,350 Supplies 4,000 Owner's Equity Omar Farah, capital 30,000 Total assets $31,250 Total liabilities and owner's equity $72,600 Answer the following questions regarding the errors in the above statements for We-Sell Realty, prepared after its first month of operations. 1. Which of the financial statement(s) display the correct heading? 2. Which of the financial statement(s) cover a period of time? 3. On the income statement, where should the miscellaneous expense be listed? 4. What is the correct net income? 5. What is the correct total for the total assets? 6. What is the correct total for the liabilities?
We-Sell Realty, organized August 1, 2016, is owned and operated by Omar Farah. We-Sell Realty Income Statement August 31, 2016 Sales commissions $140,000 Expenses: Office salaries expense $87,000 Rent expense 18,000 Automobile expense 7,500 Miscellaneous expense 2,200 Supplies expense 1,150 Total expenses 115,850 Net income $25,000 Omar Farah Statement of Owner's Equity August 31, 2015 Omar Farah, capital, August 1, 2016 $0 Less withdrawals during August 10,000 $(10,000) Investment on August 1, 2016 15,000 $5,000 Net income for August 25,000 Omar Farah, capital, August 31, 2016 $30,000 Balance Sheet For the Month Ended August 31, 2016 Assets Liabilities Cash $8,900 Accounts receivable $38,600 Accounts payable 22,350 Supplies 4,000 Owner's Equity Omar Farah, capital 30,000 Total assets $31,250 Total liabilities and owner's equity $72,600 Answer the following questions regarding the errors in the above statements for We-Sell Realty, prepared after its first month of operations. 1. Which of the financial statement(s) display the correct heading? 2. Which of the financial statement(s) cover a period of time? 3. On the income statement, where should the miscellaneous expense be listed? 4. What is the correct net income? 5. What is the correct total for the total assets? 6. What is the correct total for the liabilities?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Financial Statements
We-Sell Realty, organized August 1, 2016, is owned and operated by Omar Farah.
| We-Sell Realty | |||
| Income Statement | |||
| August 31, 2016 | |||
| Sales commissions | $140,000 | ||
| Expenses: | |||
| Office salaries expense | $87,000 | ||
| Rent expense | 18,000 | ||
| Automobile expense | 7,500 | ||
| Miscellaneous expense | 2,200 | ||
| Supplies expense | 1,150 | ||
| Total expenses | 115,850 | ||
| Net income | $25,000 |
| Omar Farah | |
| Statement of Owner's Equity | |
| August 31, 2015 | |
| Omar Farah, capital, August 1, 2016 | $0 |
| Less withdrawals during August | 10,000 |
| $(10,000) | |
| Investment on August 1, 2016 | 15,000 |
| $5,000 | |
| Net income for August | 25,000 |
| Omar Farah, capital, August 31, 2016 | $30,000 |
| For the Month Ended August 31, 2016 | ||||
| Assets | Liabilities | |||
| Cash | $8,900 | $38,600 | ||
| Accounts payable | 22,350 | Supplies | 4,000 | |
| Owner's Equity | ||||
| Omar Farah, capital | 30,000 | |||
| Total assets | $31,250 | Total liabilities and owner's equity | $72,600 |
Answer the following questions regarding the errors in the above statements for We-Sell Realty, prepared after its first month of operations.
1. Which of the financial statement(s) display the correct heading?
2. Which of the financial statement(s) cover a period of time?
3. On the income statement, where should the miscellaneous expense be listed?
4. What is the correct net income?
5. What is the correct total for the total assets?
6. What is the correct total for the liabilities?
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