Exercise 115 On October 1 Ebony Ernst organized Ernst Consul

Exercise 1-15 On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed S84,000 in assets to launch the business. On October 31, the company\'s records show the following items and amounts. Use this information to prepare an October income statement for the business. ring an income state P2 $11.360 . .14,000 3,250 46,000 8,000 8,500 84,000 Cash Cash withdrawals by owner.... Consulting fees earned Rent expense Salaries expense Telephone expense 2,000 14,000 3,550 7,000 760 580 Accounts receivable Office supplies Office equipment Accounts payable Owner investments.... Check Net income, $2,110 Exercise 1-16 Use the information in Exercise -15 to prepare an October statement of owner\'s equity for Ernst Consulting aring a statement of er\'s equity P2 Use the information in Exercise 1-15 (if completed, you can also use your solution to Exercise 1-16) to prepare an October 31 balance sheet for Ernst Consulting Exercise 1-17 reparing a balance P2

Solution

Solution:

Exercise 1-15 – Income Statement for October Month

Ernst Consulting

Income Statement for the month October

$$

Consulting fees earned (Service Revenue)

$14,000

Less: Expenses

Rent Expense

$3,550

Salaries Expense

$7,000

Telephone Expense

$760

Miscellaneous Expenses

$580

Total Expenses

$11,890

Net Income (14,000 - 11,890)

$2,110

Exercise 1-16 – Owner’s Equity

Ernst Consulting

Owner\'s Equity

$$

Owner\'s Investment

$84,000

Less: Drawings (Cash Withdrawal by owner for personal use)

-$2,000

Net Owner\'s Investment

$82,000

Plus: Net Profit earned during October (Refer Income Statement)

$2,110

Total Owner\'s Investment

$84,110

Exercise 1-17 – Balance Sheet

Ernst Consulting

Balance Sheet

Assets:

Current Assets:

Cash

$11,360

Accounts Receivable

$14,000

Office Supplies

$3,250

Total Current Assets

$28,610

Property, Plant and Equipment

Land

$46,000

Office Equipment

$18,000

Total Property Plant and Equipment

$64,000

Total Assets

$92,610

Equity & Liabilities

Current Liabilities:

Accounts Payable

$8,500

Total Liabilities

$8,500

Owner\'s Equity (Refer Exercise 1-16)

$84,110

Drawings Account

Total Equity and Liabilities

$92,610

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Ernst Consulting
Income Statement for the month October
	$$
Consulting fees earned (Service Revenue)	$14,000
Less: Expenses
Rent Expense	$3,550
Salaries Expense	$7,000
Telephone Expense	$760
Miscellaneous Expenses	$580
Total Expenses	$11,890
Net Income (14,000 - 11,890)	$2,110