Use the following information for exercise 15 to 18 LO P2 [The following information applies to…
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Question “Use the following information for exercise 15 to 18 LO P2 [The following information applies to…”
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 $84,000 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following i and amounts. Retained earnings, October 1 as $0. Cash Accounts receivable office supplies Land Office equipment Accounts payable Common stock $11,362 14,000 3,250 46,000 18,000 8,500 84,000 Cash dividends Consulting revenue Rent expense salaries expense Telephone expense Miscellaneous expenses $ 2,000 14,000 3,550 7,000 760 580 Exercise 1-18 Preparing a statement of cash flows LO P2 Also assume the following:
Required information a. The owner’s initial investment consists of $38,000 cash and $46,000 in land in exchange for its common stock b. The company’s $18,000 equipment purchase is paid in cash. c. The accounts payable balance of $8.500 consists of the $3,250 office supplies purchase and $5,250 in employee salaries yet to be paid. d. The company’s rent, telephone, and miscellaneous expenses are paid in cash e. No cash has been collected on the $14.000 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 customers Cash paid for miscellaneous expenses Cash paid to employees Cash paid for rent ‘Cash pald for telephone expenses Net cash used by investing active < Prev 14 of 15 l Next >
connect.mheducation.com/flow/connect.html Exercises 0 Saved nym inns Required information 0 580 7.000 2.550 Statement of Cash Flows For Month Ended October 31 Cash flows from operating activities Cash received from customers 5 Cash paid for miscellaneous expenses Cash paid to employees Cash paid for rent Cash paid for telephone expenses Net cash used by investing activities Cash flows from investing activities Cash investments from shareholders Net cash provided by investing activities Cash flows from financing activities are Cash paid for office equipment Accounts payable $ 10 890 84.000 84.000 18.000 Cash balance. October Cash balanco. October 31 < Prev 14 of 15 in Next > Type here to search
Answer
Solution 1 Ernst consulting: Statement of Cash Flows. For the month ending October 31, Amount:25) Amount 25, cash flows from operating Activities: cash received by customers. $0 cash paid out to employees: $1,750 Cash used for vent. $13,550) Cash paid for telephone expenses: $(760). Cash used for miscellaneous expenses. $ (580). Nel cash used in operating activities. $26,640 cash flows from. Investing Activities – cash paid office equipment $18,000) Cash flows from Financing Activities – Investments by owner $38,000 Withdrawals by owner $ 12,000 Net cash flow from Financing Activities – Financing activities 36,000 Net “Increase cash $ 11,360 cash balance, October 1 $ 0. cash balance, October 31 $11,360 Notes Dcash used to pay salaries Expense – salaries yet to be paid employees = 1,000 – $5250 => $1.750
Conclusion
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