Financial statements OBJ. 5 We-Sell Realty, organized August 1, 2016, is owned and operated by Omar Farah. 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, 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 Retained Earnings Statement August 31, 2015 Retained earnings, August 1, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0 Less dividends during August . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000

$(10,000)

Issued additional common stock August 1, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000

$ 5,000 Net income for August . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 Retained earnings, 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 Stockholders’ Equity Retained earnings . . . . . . . . . . . . . . . . . . . . . . 30,000 Total assets . . . . . . . . . . . . . . . . . . . . . . . $31,250 Total liabilities and stockholders’ equity . . $72,600