principals of accounting

2 On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $83,220 In assets to launch the business. On October 31, the company's records show the following Items and amounts. of 4 Cash $13, 840 Cash withdrawals by owner $ 1, 280 Accounts receivable 13, 140 Consulting revenue 13, 140 Office supplies 2,530 Rent expense 2,770 Land 45, 840 Salaries expense 6, 120 office equipment 17,280 Telephone expense 820 Accounts payable 7,810 Miscellaneous expenses 630 Owner investments 83, 220 Exercise 1-18 Preparing a statement of cash flows LO P2 Also assume the following: a. The owner's Initial Investment consists of $37,380 cash and $45,840 In land. b. The company's $17,200 equipment purchase is paid In cash. c. The accounts payable balance of $7,810 consists of the $2,530 office supplies purchase and $5,280 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 $13,140 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.) * Answer is complete but not entirely correct. ERNST CONSULTING Statement of Cash Flows For Month Ended October 31 Cash flows from operating activities Cash received from customers Cash paid to employees 400 X Cash paid for rent (2,770) Cash paid for telephone expenses (820) Cash paid for miscellaneous expenses (630) Net cash used by operating activities (3.820 Cash flows from investing activities Cash paid for office equipment O (17.200) Net cash used by investing activities (17.200) Cash flows from financing activities Cash investments by owner 37.380 Cash withdrawals by owner (1,280) Net cash provided by financing activities 36,100 Net increase in cash 14.680 % Cash balance, October 1 OV Cash balance, October 31 4.080