Use the information in Exercise 1-14 to prepare an October

Use the information in Exercise 1-14 to prepare an October 31 statement of cash flows for Real Answers.

In Exercise 1-14, On October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner contributed $84,000 cash. On October 31, the company’s records show the following items and amounts. Use this information to prepare an October income statement for the business.

Cash . . . . . . . . . . . . . . . . . . . . . . .$11,360

Accounts receivable . . . . . . . . . . 14,000

Office supplies . . . . . . . . . . . . . . . 3,250

Land . . . . . . . . . . . . . . . . . . . . . . . 46,000

Office equipment . . . . . . . . . . . . 18,000

Accounts payable . . . . . . . . . . . . . 8,500

Owner investments . . . . . . . . . . . . 84,000

Cash withdrawals by owner. . . . . . $ 2,000

Consulting fees earned . . . . . . . . . 14,000

Rent expense . . . . . . . . . . . . . . . . . 3,550

Salaries expense . . . . . . . . . . . . . . 7,000

Telephone expense. . . . . . . . . . . . . 760

Miscellaneous expenses . . . . . . . . 580


Also assume the following:

a. The owner’s initial investment consists of $38,000 cash and $46,000 in land.

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 fees earned.


Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...

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