Question

Required information

Use the following information for exercise 15 to 18 LO P2

[The following information applies to the questions displayed below.]

On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $82,890 in assets to launch the business. On October 31, the company’s records show the following items and amounts.

Cash	$	15,140		Cash withdrawals by owner	$	830
Accounts receivable		12,720		Consulting revenue		12,720
Office supplies		2,110		Rent expense		2,380
Land		46,010		Salaries expense		5,620
Office equipment		16,780		Telephone expense		780
Accounts payable		7,360		Miscellaneous expenses		600
Owner investments		82,890

Exercise 1-18 Preparing a statement of cash flows LO P2

Also assume the following:

1. The owner’s initial investment consists of $36,880 cash and $46,010 in land.
2. The company’s $16,780 equipment purchase is paid in cash.
3. The accounts payable balance of $7,360 consists of the $2,110 office supplies purchase and $5,250 in employee salaries yet to be paid.
4. The company’s rent, telephone, and miscellaneous expenses are paid in cash.
5. No cash has been collected on the $12,720 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.)

ERNST CONSULTING
Statement of Cash Flows
For Month Ended October 31
Cash flows from operating activities
Cash received from customersnot attempted	$0selected answer correct
Cash paid for rentselected answer correct	(2,380)selected answer correct
Cash paid for miscellaneous expensesselected answer correct	(600)selected answer correct
Cash paid for telephone expensesselected answer correct	(780)selected answer correct
Cash withdrawals by ownerselected answer incorrect	not attempted
Net cash provided by operating activitiesselected answer incorrect		$(3,760)
Cash flows from investing activities
Cash paid for office equipmentselected answer correct	(16,780)selected answer correct
Net cash provided by operating activitiesselected answer incorrect		(16,780)
Cash flows from financing activities
Cash investments by ownerselected answer correct	36,880selected answer correct
Cash withdrawals by ownerselected answer correct	830selected answer incorrect
Net cash provided by financing activitiesselected answer correct		37,710
Net increase in cashselected answer correct		36,050selected answer incorrect
Cash balance, October 1		not attempted
Cash balance, October 31		$36,050

Answer 1

$5250-$5620 -$4,130 ERNST CONSULTING Statement of Cash Flows For Month Ended October 31 Cash flows from operating activities Cash received from customers $0 Cash paid for rent -$2,380 Cash paid for miscellaneous expenses $600 Cash paid for telephone expenses $780 Cash paid for salaries expense $370 Net cash provided by operating activities Cash flows from investing activities Cash paid for office equipment $16,780 Net cash provided by operating activities Cash flows from financing activities Cash investments by owners $36,880 Cash withdrawals by owner $830 Net cash provided by financing activities Net increase in cash Cash balance, October 1 Cash balance, October 31 -$16,780 $36,050 $15,140 $0 $15,140