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

1	Sales commissions		$140,000.00
2	Expenses:
3	Office salaries expense	$87,000.00
4	Rent expense	18,000.00
5	Automobile expense	7,500.00
6	Miscellaneous expense	2,200.00
7	Supplies expense	1,150.00
8	Total expenses		(115,850.00)
9	Net income		$25,000.00

Omar Farah

Statement of Stockholders Equity

For the Month Ended August 31, 20Y6

1		Retained Earnings	Total
2	Balances, August 1, 20Y7	$0.00	$0.00
3	Net income	25,000.00	25,000.00
4	Dividends	(10,000.00)	(10,000.00)
5	Balances, August 31, 20Y7	$15,000.00	$15,000.00

Balance Sheet

For the Month Ended August 31, 20Y7

1	Assets
2	Cash	$8,900.00
3	Accounts payable	22,350.00
4	Total assets	$31,250.00
5	Liabilities
6	Accounts receivable	$38,600.00
7	Supplies	4,000.00
8	Stockholders Equity
9	Retained earnings	30,000.00
10	Total liabilities and stockholders equity	$72,600.00

Required:

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.

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

1. Which of the financial statement(s) display the correct heading?

2. Which of the financial statement(s) cover a period of time?

3. What is the equation on the balance sheet?

4. What is the correct net income?

This error also affects what other account balance?

5. What is the correct total for the total assets?

6. What is the correct total for the liabilities?

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

1	Sales commissions		$140,000.00
2	Expenses:
3	Office salaries expense	$87,000.00
4	Rent expense	18,000.00
5	Automobile expense	7,500.00
6	Miscellaneous expense	2,200.00
7	Supplies expense	1,150.00
8	Total expenses		(115,850.00)
9	Net income		$25,000.00

Omar Farah

Statement of Stockholders Equity

For the Month Ended August 31, 20Y6

1		Retained Earnings	Total
2	Balances, August 1, 20Y7	$0.00	$0.00
3	Net income	25,000.00	25,000.00
4	Dividends	(10,000.00)	(10,000.00)
5	Balances, August 31, 20Y7	$15,000.00	$15,000.00

Balance Sheet

For the Month Ended August 31, 20Y7

1	Assets
2	Cash	$8,900.00
3	Accounts payable	22,350.00
4	Total assets	$31,250.00
5	Liabilities
6	Accounts receivable	$38,600.00
7	Supplies	4,000.00
8	Stockholders Equity
9	Retained earnings	30,000.00
10	Total liabilities and stockholders equity	$72,600.00

Required:

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.

X

Accounts, Labels and Amount Descriptions

Accounts
Accounts receivable
Accounts payable
Automobile expense
Cash
Common stock
Sales commissions
Miscellaneous expense
Rent expense
Retained earnings
Office salaries expense
Supplies
Supplies expense
Labels
Expenses
For the Month Ended August 31, 20Y7
August 31, 20Y7
Amount Descriptions
Balances, August 1, 20Y7
Balances, August 31, 20Y7
Dividends
Issued common stock
Net income
Net loss
Total assets
Total expenses
Total liabilities and stockholders equity
Total stockholders equity

X

First Question

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

1. Which of the financial statement(s) display the correct heading?

2. Which of the financial statement(s) cover a period of time?

3. What is the equation on the balance sheet?

4. What is the correct net income?

This error also affects what other account balance?

5. What is the correct total for the total assets?

6. What is the correct total for the liabilities?

b1. Prepare an income statement for the month ended August 31, 20Y7. Refer to the lists of Accounts, Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. If there is a net loss, enter that amount as a negative number using a minus sign. You will not need to enter colons (:) on the income statement.