Question

On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $85,050 in assets in exchange for its common stock to launch the business. On December 31, the company’s records show the following items and amounts. Cash $ 7,950 Cash dividends $ 3,070 Accounts receivable 17,450 Consulting revenue 17,450 Office supplies 4,200 Rent expense 4,530 Office equipment 19,060 Salaries expense 8,090 Land 46,010 Telephone expense 880 Accounts payable 9,430 Miscellaneous expenses 690 Common stock 85,050 Also assume the following: The owner’s initial investment consists of $39,040 cash and $46,010 in land in exchange for its common stock. The company’s $19,060 equipment purchase is paid in cash. Cash paid to employees is $2,860. The accounts payable balance of $9,430 consists of the $4,200 office supplies purchase and $5,230 in employee salaries yet to be paid. The company’s rent expense, telephone expense, and miscellaneous expenses are paid in cash. No cash has yet been collected on the $17,450 consulting revenue earned.
Using the above information prepare a December statement of cash flows for Ernst Consulting. (Cash outflows should be indicated by a minus sign.)

Answer 1

Answer:

$3,260

Explanation:

Preparation of December statement of cash flows for Ernst Consulting

ERNST CONSULTING Income Statement

For Month Ended October 31

REVENUES

Consulting fees earned $17,450

Total revenues $17,450

EXPENSES

Rent expense $4,530

Salaries expense $8,090

Telephone expense $880

Miscellaneous expenses $690

Total expenses $14,190

Net income $3,260

($17,450-$14,190)

Therefore December statement of cash flows for Ernst Consulting will be $3,260