Pulmonary Consulting, Inc., organized April 1, 2007, is operated by Dr. Tobin. How many er-
rors can you find in the following financial statements for Pulmonary Consulting, Inc., pre-
pared after its first month of operation?90 Chapter 2 Basic Accounting Concepts
Alternate Problem
2-6BFinancial statements
Goals3, 5Pulmonary Consulting, Inc.
Income Statement
April 30, 2007Fees earned $92,500
Operating expenses:
Office salaries expense $42,500
Rent expense 12,500
Automobile expense 8,750
Dividends 5,000
Miscellaneous expense 2,750
Total operating expenses 77,500
Net income $15,000Pulmonary Consulting, Inc.
Retained Earnings Statement
April 30, 2008Net income for the month $15,000
Retained earnings, April 30, 2007 $15,000Dr. Tobin
Balance Sheet
For the Month Ended April 30, 2007Assets
Cash $ 31,000
Notes payable 50,000
Total assets $ 81,000Liabilities
Land $ 65,000Stockholders’ Equity
Capital stock $25,000
Retained earnings 15,000 40,000
Total liabilities and stockholders’ equity $105,000