Question

On October 1, Ebony Ernst organized Ernst Consulting: on October 3, the owner contributed $85,360 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. Retained earnings, October 1 as $0. Cash Accounts receivable Office supplies Land Office equipment Accounts payable Common stock $ 7,010 18,350 4,480 46,040 19,360 9,740 85,360 Cash dividends Consulting revenue Rent expense Salaries expense Telephone expense Miscellaneous expenses $ 3,390 18,350 4,820 8,370 910 720 Using the above information prepare an October income statement for the business. ERNST CONSULTING Income Statement Accounts payable Accounts receivable Cash Cash dividends

Answer 1

ERNST CONSULTING
Income Statement
At October 31
Revenues:
Consulting revenue	18,350
Total revenue		18,350
Expenses:
Rent expense	4,820
Salaries expense	8,370
Telephone expense	910
Miscellaneous expense	720
Total expenses		-14,820
Net Income		$3,530

ERNST CONSULTING
Statement of Retained Earnings
At October 31
Retained earnings, October 1	0
Add:Net Income	3,530
	$3,530
Less: Cash dividends	-3,390
Retained earnings, October 31	$140

ERNST CONSULTING
Balance Sheet
At October 31
Assets	Amount	Liabilities	Amount
Cash	7,010	Accounts payable	9,740
Accounts receivable	18,350	Total liabilities	9,740
Office supplies	4,480	Stockholders Equity:
Land	46,040	Common stock	85,360
Office equipment	19,360	Retained earnings	140
		Total stockholders equity	85,500
Total Assets	$95,240	Total Liabilities & Stockholders Equity	$95,240

Kindly comment if you need further assistance. Thanks‼!