Ask Question
13 May, 19:38

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 items and amounts. Cash $ 11,360 Cash dividends $ 2,000 Accounts receivable 14,000 Consulting revenue 14,000 Office supplies 3,250 Rent expense 3,550 Land 46,000 Salaries expense 7,000 Office equipment 18,000 Telephone expense 760 Accounts payable 8,500 Miscellaneous expenses 580 Common Stock 84,000 Using the above information prepare an October statement of retained earnings for Ernst Consulting.

+2
Answers (1)
  1. 13 May, 20:47
    0
    Retained Earnings balance = $110

    Explanation:

    Provided information we have,

    Opening assets = $84,000

    Retained earnings opening balance = 0

    Thus, amount to be added in retained earnings for the period, shall be:

    Cash dividends = - $2,000 as this will be paid to shareholders.

    Consulting Revenue = $14,000 Added to retained earnings

    Expenses for the period = Rent expense + Salaries Expense + Telephone Expense + Miscellaneous Expense

    = $3,550 + $7,000 + $760 + $580 = $11,890

    Thus, profit = $14,000 - $11,890 = $2,110

    Less: Dividend = $2,110 - $2,000 = $110 = Retained Earnings

    Statement shall be as follows:

    Revenue

    Consulting Revenue = $14,000

    Less: Expenses

    Rent $3,550

    Salary $7,000

    Telephone $760

    Miscellaneous $580 $11,890

    Net Profit $2,110

    Less: Dividend $2,000

    Retained Earnings $110
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $84,000 in assets in exchange for its common ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers