Chapter 1, Problem

Financial statements

We-Sell Realty, organized as a corporation on August 1, 2018, is owned and operated by Omar Farah, the sole stockholder. How many errors can you find in the following statements for We-Sell Realty, prepared after its first month of operations?

We-Sell Realty Income Statement August 31, 2018
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 Retained Earnings Statement August 31, 2017
Retained earnings, August 1,2018		$0
Dividends		(10,000)
	$(10,000)
Issued additional common stock August 1,2018		15,000
	$5,000
Net income		25,000
Retained earnings, August 31, 2018		$30,000

	Balance Sheet For the Month Ended August 31, 2018
Cash			Assets	$8,900
Accounts payable			22,350
Total assets			$31,250
	Liabilities
Accounts receivable			$38,600
Supplies			4,000

Stockholders’ Equity
Retained earnings		30,000
Total liabilities and stockholders’ equity		$72,600