Use the information in Exercise 1-18 to prepare a December statement of cash flows for Ernst Consulting. Assume the following additional 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 revenue earned.

Exercise 1-18

On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $84,000 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. Use this information to prepare a December income statement for the business.

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Cash....... $11,360 Cash dividends $ 2,000 Accounts receivable. 14,000 Consulting revenue. 14,000 Office supplies. 3,250 Rent expense... 3,550 Office equipment . 18,000 Salaries expense. 7,000 Land.... 46,000 Telephone expense. 760 Accounts payable . 8,500 Miscellaneous expenses.. 580 Common stock . 84,000