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.

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