Question

Please identify 5 errors in the following financial statements. Note: The 4 financial statements are for different companies. They are not related. You must clearly specify each financial statement name and its issue(s). Blazers Corporation Income Statement For the Years Ended December 31, 2016 and 2017 2016 2017 Service revenue 82,000 54,700 Total revenue 82,000 54,700 41,000 3,000 Expenses Operating expenses Supplies expenses Prepaid rent Salaries expenses Tcal expenses 39,500 2,900 5,900 8,000 56,300 44,000 Net Income(loss) 38,000 (1,600)

Answer 1

Solution:

There are following errors in the given financial statements

S. No.	Name of Company	Name of Financial Statement	Errors
1.	Blazers Corporation	Income Statement	Prepaid rent is not an expense. It is a Current asset
2.	49ers COMPANY	Statement of Changes in Shareholders’ Equity	Amount of Ending Retained Earnings for year 2018 becomes the Beginning Retained Earnings for year 2019
3.	REID COMPANY	Statement of Cash Flows	Cash payment for supplies is not an Investing Activity, it is an Operating Activity.
4.	REID COMPANY	Statement of Cash Flows	Cash payments for dividends is not an Investing Activity, it a Financing Activity
5.	REID COMPANY	Statement of Cash Flows	Ending Cash Balance is $127,300 not $129,300. It is a totaling mistake.