Redwood Realty, organized May 1, 2011, is owned and operated by Lorrimer Fleming. How many errors can you find in the following financial statements for Redwood Realty, prepared after its first month of operations? Assume that the cash balance on May 31, 2011, is $46,600 and that cash flows from operating activities is reportedcorrectly.

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REDWOOD REALTY income Statement May 31, 2011 Sales commissions $308,400 Operating expenses: Office salaries expense Rent expense Miscellaneous expense Automobile expense $172,600 31,200 2,200 7,900 Total operating expenses 213,900 $134.500 Net income LORRIMER FLEMING Retained Earnings Statomont May 31, 2010 S 17,800 Retained earnings, May 1, 2011 Less dividends during May 12,000 $ 5,800 Net income for the month 134,500 $140,300 Retained earnings, May 31, 2011 Balance Sheet For the Month Ended May 31, 2011 Assets S 46,600 12,500 60,000 $119,100 Cash Accounts payable Land Total assets Liabilities $ 81,200 7,200 Accounts receivable Prepaid expenses Stockholders' Equity Capital stock Retained earnings Total liabilities and stockholders' equity $100,000 140,300 240,300 $328,700 Statement of Cash Flows May 31, 2011 Cash flows from operating activities: Cash received from customers 5227,200 208,600 Cash paid for operating expenses Net cash flow from operating activities Cash flows from financing activities: $ 18,600 Cash received from issuance of capital stock Dividends paid to stockholders Net cash flow from financing activities Net cash flow and cash balance as of May 31, 2011 $100,000 (12,000) 88,000 S106,600