Financial statements Obj. 5 We-Sell Realty was organized as a corporation on August 1, 20Y7, by the issuance of common stock of $15,000. We-Sell Realty is owned and operated by Omar Farah, the sole stockholder. The following statements for We-Sell Realty were prepared after its first month of operations:

We-Sell Realty Income Statement August 31, 20Y7 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 Stockholders’ Equity For the Year Ended August 31, 20Y6 Retained Earnings Total Balances, August 1, 20Y7 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0 $ 0 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 25,000 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,000) (10,000)

Balances, August 31, 20Y7 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,000 $ 15,000 Balance Sheet For the Month Ended August 31, 20Y7 Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 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

a. Identify the errors contained within the presented financial statements for We-Sell Realty.

b. Prepare a corrected set of financial statements for We-Sell Realty.

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