OBGYN Consulting Inc., organized February 1, 2004, is operated by Dr. Cline. How many errors can you… 1 answer below »

OBGYN Consulting Inc., organized February 1, 2004, is operated by Dr. Cline. How many errors can you find in the following financial statements for OBGYN Consulting Inc., prepared after its first month of operations? OBGYN Consulting Inc.

Income Statement

February 29, 2004

Fees earned

 

$18,500

Operating expenses:

 

 

Office salaries expense

$8,500

 

Rent expense

2,500

 

Automobile expense

1,750

 

Dividends

1,000

 

Miscellaneous expense

550

 

Total operating expenses

 

15,500

Net income

 

$ 3,000

  OBGYN Consulting Inc.

Retained Earnings Statement

February 29, 2005

Net income for the month

$3,000

Retained earnings, February 29, 2004

$3,000

  Dr. Cline

Balance Sheet Inc.

For the Month Ended February 29, 2004

Assets

 

 

Cash

 

$ 6,200

Notes payable

 

10,000

Total assets

 

$16,200

Liabilities

 

 

Land

 

$13,000

Stockholders’ Equity

 

 

Capital stock

$5,000

 

Retained earnings

3,000

8,000

Total liabilities and stockholders’ equity

 

$21,000

 

Statement of Cash Flows

February 29, 2004

Cash flows from operating activities:

 

Cash receipts from fees earned

$18,500

Net cash from operating activities

$18,500

Cash flows from investing activities:

 

Cash payments for land

13,000

Cash flows from financing activities:

 

Cash receipts from issuance of capital stock

5,000

Net increase in cash during February

$36,500

Cash as of February 1, 2004

0

Cash as of February 29, 2004

$36,500

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