Use the information in Exercise 1-14 to prepare an October 31 statement of cash flows for Real Solutions. Also assume the following: a. The owner’s initial investment consists of $38,000 cash and $36,000 in land. b. The company’s $28,000 equipment purchase is paid in cash. c. The accounts payable balance of $7,500 consists of the $4,250 office supplies purchase and $3,250 in employee salaries yet to be paid. d. The company’s rent, telephone, and miscellaneous expenses are paid in cash. e. $2,000 has been collected on the $15,000 consulting fees earned.

Exercise 1-14

On October 1, Natalie King organized Real Solutions, a new consulting firm. 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 . . . . . . . . . . . . . . . . . . . . . $ 2,000                     Cash withdrawals by owner . . . . . . . . . $ 3,360

Accounts receivable . . . . . . . . 13,000                      Consulting fees earned . . . . . . . . . . . . . 15,000

Office supplies . . . . . . . . . .. . . 4,250                         Rent expense . . . . . . . . . . . . . . . . . . . . 2,550

Land . . . . . . . . . . . . . . . . . . . . . 36,000                      Salaries expense . . . . . . . . . . . . . . . . . . 6,000

Office equipment . . . . . . . . . . 28,000                       Telephone expense . . . . . . . . . . . . . . . . 660

Accounts payable . . . . . . . . . . . 7,500                       Miscellaneous expenses . . . . . . . . . . . . 680

Owner investments . . . . . . . . . 74,000