Question

On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $83,850 in assets to launch the business. On October 31, the company's records show the following items and amounts.
Cash $7,950 Cash withdrawals by owner 3,070
Accounts recelvable 15,040 Consulting fees earned 15,040
Office suppliles 4,200 Rent expense 4,530
Land 46,010 Salaries expense 8,090
Office equlpment 19,060 Telephone expense 880
Accounts payable 9,430 Miscellaneous expenses 880
Owner Investments 85,050
Requirement:
A) Using the above information prepare an October income statement for the business.
B) Using the above information prepare an October statement of owner's equity for Ernst Consulting.
C) Using the above information prepare an October 31 balance sheet for Ernst Consulting.

Answer 1

Answer:

a.                 Income Statement

Revenues:

Consulting fees earned     $15,040

Total revenues                                      $15,040

Expenses:

Salaries expenses              $8,090

Rent                                     $4,350

Telephone                           $880

Miscellaneous                     $880

Total Expenses                                     $14,200

Net Income                                           $840

b. Statement of owners equity

Particulars                            Amount     Amount

Add: Investment by owner $85,050

Net Income                          $840

Capital, October 1                                    $85,890

Less: Withdrawal by owner                      $3,070

Capital, October 31                                  $82,820

c. Balance sheet

                Assets                                          Liabilities

Cash                             $7,950          Accounts payable         $9,430

Accounts receivable   $15,040

Office supplies            $4,200

Land                             $46,010        Owner's equity              $82,820

Office equipment        $19,060                                                              

Total assets                 $92,250     Total liabilities & Equity  $92,250