Question

The owner’s initial investment consists of $38,600 cash and $45,980 in land. The company’s $18,550 equipment purchase is paid in cash. The accounts payable balance of $9,060 consists of the $3,830 office supplies purchase and $5,230 in employee salaries yet to be paid. The company’s rent, telephone, and miscellaneous expenses are paid in cash. No cash has been collected on the $14,620 consulting fees earned. Using the above information prepare an October 31 statement of cash flows for Ernst Consulting. (Cash outflows should be indicated by a minus sign.)

Answer 1

Missing information:

ERNST CONSULTING

Income Statement

October 31. 202x

Revenues:

Consulting fees earned $15,600  

Total revenues $15,600

Expenses:

Salaries expense $7,450  

Rent expense $4,070

Telephone expense $810

Miscellaneous expenses $630

Total expenses $12,960

Net income $2,640

Cash dividends $2,530

Answer:

Ernst Consulting

Statement of Cash Flows

October 31, 202x

Cash flows from operating activities:

Cash received from customers                                     $0

Cash paid for:

Rent expense                                                         -$4,070

Telephone expense                                                  -$810

Miscellaneous expenses                                         -$630

Total cash flow from operating activities             -$5,510

Cash flows from investing activities:

Cash paid for equipment                                     -$18,550

Total cash flows from investing activities           -$18,550

Cash flows from financing activities:

Cash investment from stockholders                   $38,600

Cash paid for dividends                                        -$2,530

Total cash flows from financing activities           $36,070

Net cash increase                                                  $12,010

Cash balance October 1, 202x                                     $0

Cash balance October 31, 202x                           $12,010