Find Statement Errors

Find the errors in the statements and correct them. 2 errors in the balance sheet. 1 error in the income statement. 1 error in the statement of owners equity. 2 errors in the statement of cash flows.

SHEILA SHAW CONSULTING

Balance Sheet

August 31, 2011

Assets Liabilities

Current assets: Current liabilities:

Cash $ 21,300 Accounts payable $ 1,250

Accounts receivable 3,800 Prepaid rent 2,050

Supplies 875 Unearned fees 1,150

Salaries payable 150 Total liabilities $ 4,450

Prepaid insurance 1,670

Total current assets $ 27,795

Property, plant, and

equipment: Owner’s Equity

Office equipment $ 21,250 Sheila Shaw, capital 47,720

Less accum. depr. 675

Total Property, plant,

and equipment 20,575 Total liabilities and

Total assets $ 48,370 owner’s equity $ 52,170

SHEILA SHAW CONSULTING

Income Statement

For the Month Ended August 31, 2011

Fees earned $ 24,325

Expenses:

Salary expense $1,550

Rent expense 1,200

Supplies expense 1,250

Insurance expense 1,000

Miscellaneous expense 715

Interest expense 65

Bad Debt expense 150

Repairs and Maintenance 200

Utilities expense 150

Payroll Tax expense 125

Office expense 525

Total expenses 6,930

Net income $ 17,395

SHEILA SHAW CONSULTING

Statement of Owner’s Equity

For the Month Ended August 31, 2011

Sheila Shaw, capital, August 1, 2007 $ 0

Additional investments during the month 36,000

Total $ 36,000

Net income for the month $ 17,395

Less withdrawals 5,000

Increase in owner’s equity 12,395

Sheila Shaw, capital, August 31, 2007 $ 48,395

SHEILA SHAW CONSULTING

Statement of Cash Flows

For the Month Ended August 31, 2011

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income for the month: $17,395

Adjustment for depreciation 675

Cash provided by operating activities 18,070

(Increase) in working capital items

Accounts receivable (3,800)...