Required information [The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $82,650 in assets to launch the business. On December 31, the company's records show the following items and amounts. Cash wit $ 15,200 12,410 Consulti 1,770 Rent exp 46,080 Salaries 16,450 Telephon 6,060 Miscella 82,650 Cash Accounts receivable Office supplies Land Office equipment Accounts payable Owner investments Using the above information prepare a December statement of owner's equity for Ernst Consulting. Hint. J. Ernst, Capital on December 1 was $0. ERNST CONSULTING Statement of Owner's Equity J. Ernst, Capital, December 1 $ $
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
![Required information
[The following information applies to
the questions displayed below.]
On December 1, Jasmin Ernst organized
Ernst Consulting. On December 3, the
owner contributed $82,650 in assets to
launch the business. On December 31,
the company's records show the
following items and amounts.
$ 15,200 Cash wit
12,410 Consulti
Cash
Accounts receivable
Rent exp
Office supplies
Land
Office equipment
Accounts payable
1,770
Salaries
46,080
16,450 Telephon
6,060 Miscella
82,650
Owner investments
Using the above information prepare a December
statement of owner's equity for Ernst Consulting. Hint:
J. Ernst, Capital on December 1 was $0.
ERNST CONSULTING
Statement of Owner's Equity
J. Ernst, Capital, December 1
$
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F32a2307b-f282-43f6-b044-9077c1b666f8%2Fc47700b1-294c-4fa4-89ff-5ded6a28e956%2F3pqmsps_processed.jpeg&w=3840&q=75)
![plies to
N.]
organized
er 3, the
i assets to
ember 31,
the
$ 15,200
12,410 Consulting revenue
1,770
46,080
16,450 Telephone expense
6,060 Miscellaneous expenses
82,650
$ 460
12,410
2,140
5,300
Cash withdrawals by owner
Rent expense
Salaries expense
750
560
e a December
it Consulting. Hint.
$0.
ity](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F32a2307b-f282-43f6-b044-9077c1b666f8%2Fc47700b1-294c-4fa4-89ff-5ded6a28e956%2F07y89hn_processed.jpeg&w=3840&q=75)
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