Question

Required information [The following information applies to the questions displayed below.) On October 1, Ebony Erst organized Ernst Consulting; on October 3, the owner contributed $82,650 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 $15,200 12,410 1,770 46,080 16,450 6,060 82,650 Cash dividends Consulting revenue Rent expense Salaries expense Telephone expense Miscellaneous expenses $ 460 12,410 2,140 5,300 750 560 Using the above information prepare an October statement of retained earnings for Ernst Consulting, ERNST CONSULTING Statement of Retained Earnings Retained earnings, October 1 Add: Net income 3,660 3,660 Less: Dividends S 3.660

Answer 1

Required:

Statement of retained earnings:

Retained earnings, October 1	$0
(+) Net income	$3,660
(-) Dividends	($460)
Retained earnings, October 31	$3,200

Working:

Compuration of net income:

Consulting revenue		$12,410
(-) Operating expenses:
Rent expenses	$2,140
Salaries expenses	$5,300
Telephone expenses	$750
Miscellaneous expenses	$560	($8,750)
Net income		$3,660