Outlaw Realty, organized August 1, Year 1, is owned and operated by Julie Baxter. How many errors can you find in the following financial statements for Outlaw Realty, prepared after its first month of operations? Assume that the cash balance on August 31, Year 1, is $51,600 and that cash flows from operating activities is reported correctly.

JULIE BAXTER

Retained Earnings Statement

August 31, Year 2

Retained earnings, August 1, Year 1 ....................................... $ 7,800

Less dividends during August................................................     12,000

                                                                                                         $ 5,800

Net income for the month….................................................    134,500

Retained earnings, August 31, Year 1..................................  $ 40,300

Statement of Cash Flows

August 31, Year 1

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OUTLAW REALTY Income Statement August 31, Year 1 $408,400 Operating expenses: Office salaries expense. . . …--… Rent expense.... Miscellaneous expense. . .. . $272,600 31,200 2,200 :.7,900 Total operating expenses. . . 313,900 $134,500 Net income Balance Sheet For the Month Ended August 31, Year 1 Assets Cash Accounts payable Land.... Total assets. . . . … 17,500 60,000 $129,100 Liabilities ivable... . S 81,200 Prepaid expenses Stockholders' Equity $100,000 140,300 240,300 $328,700 Total liabilities and stockholders' equity