For Jane T (LLC)
I need your help with this project
You have accepted a job as the controller of a start-up company–a consulting firm, called Sheila Shaw Consulting. Sheila is an excellent consultant, but not a good accountant. She has attempted to prepare the first month’s financial statements, however, the statements do not balance. Her financial statements are a good starting point, but your job is to correct the errors.

The statements are presented here.

Sheila is grateful to have you on board as her controller, and you are eager to make a good impression on her by finding the errors in her statements. Download Sheila’s statements and make the changes to them. All the information you need to find the errors is contained in these statements.

Hint: There are 2 errors in the Balance Sheet, 1 error in the Income Statement, 1 error in the Statement of Owner’s Equity, and 2 errors in the Statement of Cash Flows. You will want to keep in mind all that you have learned in terms of the items on financial statements which are duplicated and flow from one statement to another.

Assignment Checklist:

1. Report 2 balance sheet errors

2. Produces 1 statement of owner’s equity errors

3. Report 2 errors on the statement of cash

4. Prepare corrected financial statements

Here is the information:

SHEILA SHAW CONSULTING

Balance Sheet

August 31, 2007

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, 2007

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, 2007

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, 2007

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)

Supplies.............................................................................. (875)

Prepaid expenses............................................................... 3,720

Accounts payable.............................................................. 1,250

Salaries payable................................................................. 150

Unearned fees.................................................................... 1,150

Cash flows from operating activities........................................... $18,990

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of office equipment........................................... (21,250)

Cash flows from investing activities............................................ $(21,250)

CASH FLOWS FROM FINANCING ACTIVITIES:

Advances from shareholder (net of withdrawals).............. 31,000

Cash flows from financing activities........................................... $31,000

Net increase in cash....................................................................... $28,740

CASH-BEGINNING OF PERIOD............................................. 0

CASH-END OF PERIOD............................................................ $21,300