ACC 290T Wk 1 – Practice: Connect Knowledge Check

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 $85,360 in assets to launch the business. On October 31, the company’s records show the following items and amounts.

Exercise 1-15 Preparing an income statement LO P2

Using the above information prepare an October income statement for the business.

Exercise 1-16 Preparing a statement of owner’s equity LO P2

Using the above information prepare an October statement of owner’s equity for Ernst Consulting.

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

Also assume the following:

1. The owner’s initial investment consists of $39,320 cash and $46,040 in land.
2. The company’s $19,360 equipment purchase is paid in cash.
3. The accounts payable balance of $9,740 consists of the $4,480 office supplies purchase and $5,260 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 $15,360 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.)

Using your earlier attempt(s) as study attempts is highly recommended, if needed.

True or False