Errors in Financial Statements The following financial statements are available for Sherwood Real Estate Company:

Sherwood Company is using these financial statements to entice investors to buy stock in the company. However, a recent FBI investigation revealed that the sale of real estate was a fabricated transaction with a fictitious company that was recorded to make the financial statements look better. The sales price was $5,000,000 with a zero cash down payment and a $5,000,000 receivable. Prepare financial statements for Sherwood Company showing what its total assets, liabilities, stockholders’ equity, and income really are with the sale of real estate removed.

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Assets Balance Sheet $ 1,300 Accounts payable Cash Receivable from sale of real estate Interest receivable* Mortgage payable 5,000,000 Total liabilities.. 180,000 Real estate properties 6,000,000 Capital stock Retained earnings Total stockholders' equity Total liabilities and Total assets $11,181,300 stockholders' equity *Interest Receivable applies to Receivable from sale of real estate. Gain on sale of real estate Interest income* Income Statement Total revenues Expenses Net income *Interest Income applies to Receivable from sale of real estate. Liabilities $ 100,000 6,000,000 $ 6,100,000 Stockholders' Equity $ 10,000 5,071,300 5,081,300 $11,181,300 $3,200,000 180,000 $3,380,000 1,200,000 $2,180,000