On December 1 Jasmin Ernst Organized Ernst Consulting

On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $82,890 in assets in exchange for its common stock to launch the business. On December 31, the company’s records show the following items and amounts.

Cash	$ 15,140	Cash dividends	$ 830
Accounts receivable	12720	Consulting revenue	12720
Office supplies	2,110	Rent expense	2,380
Office equipment	16,780	Salaries expense	5,620
Land	46,010	Telephone expense	780
Accounts payable	7,360	Miscellaneous expenses	600
Common stock	82,890

Q1. Using the above information prepare a December income statement for the business.

Q2. Using the above information prepare a December statement of retained earnings for Ernst Consulting. Hint: Retained Earnings on December 1 was $0.

Q3. Use the above information to prepare a December 31 balance sheet for Ernst Consulting.

Q4. Also assume the following:

1. The owner’s initial investment consists of $36,880 cash and $46,010 in land in exchange for its common stock.
2. The company’s $16,780 equipment purchase is paid in cash.
3. Cash paid to employees is $370. The accounts payable balance of $7,360 consists of the $2,110 office supplies purchase and $5,250 in employee salaries yet to be paid.
4. The company’s rent expense, telephone expense, and miscellaneous expenses are paid in cash.
5. No cash has yet been collected on the $12,720 consulting revenue earned.

Using the above information prepare a December statement of cash flows for Ernst Consulting. (Cash outflows should be indicated by a minus sign.)

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