
Financial & Managerial Accounting, Loose-Leaf Version
14th Edition
ISBN: 9781337270700
Author: Carl S. Warren, James M. Reeve, Jonathan Duchac
Publisher: South-Western College Pub
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Textbook Question
Chapter 1, Problem 1.25EX
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, 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 |
Cash | Assets | $8,900 | ||
Accounts payable | 22,350 | |||
Total assets | $31,250 | |||
Liabilities | ||||
$38,600 | ||||
Supplies | 4,000 |
Stockholders’ Equity | ||
Retained earnings | 30,000 | |
Total liabilities and stockholders’ equity | $72,600 |
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Chapter 1 Solutions
Financial & Managerial Accounting, Loose-Leaf Version
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