Question

Required information [The following information applies to the questions displayed below.] On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $85,460 in assets in exchange for its common stock to launch the business. On October 31, the company's records show the following items and amounts. Cash Accounts receivable Office supplies Land Office equipment Accounts payable Common Stock 3,490 19,000 4,920 8,500 890 700 $6,650 Cash dividends 19,000 Consulting revenue 4,640 Rent expense 46,000 Salaries expense 19,560 Telephone expense 9,890 Miscellaneous expenses 85,460

Answer 1

Solution:

Ernst Consuting
Balance Sheet
Assets		Liabilities and Owner's Equity
Fixed Assets:		Owner's Equity:
Land	$46,000	Common Stock	$85,460
Office Equipment	$19,560	Add: Net income (Note)	$3,990
Current Assets:		Less: Dividends	-$3,490
Cash	$6,650	Current Liabilities:
Accounts receivable	$19,000	Accounts Payable	$9,890
Office supplies	$4,640
Total Assets	$95,850	Total Liabilities and Owner's Equity	$95,850

Note:

Net Income = 19000 - 4920 - 8500 - 890 - 700 = $3,990