Short Answer 
The opening retained earnings balance for Ernst Consulting is $0 since they started operations in December. After adding the $14,000 in consulting revenue and subtracting total expenses of $11,890 and cash dividends of $2,000, the ending retained earnings for December 31 amount to $110.
Step 1: Start with Opening Retained Earnings
Begin the preparation of the December statement by establishing the opening retained earnings balance. In this situation, Ernst Consulting started operations in the same month, so the opening balance is 0. This initial amount serves as the foundation for subsequent calculations.
Step 2: Add Consulting Revenue
Next, add the total consulting revenue earned during December to the opening balance. Ernst Consulting earned $14,000 through its consulting services. This revenue will increase the retained earnings, setting the stage for the next calculation step.
Step 3: Subtract Expenses and Dividends
Now, calculate the total expenses and dividends to determine the final retained earnings. Subtract the total expenses of $11,890 and the cash dividends of $2,000 from the amount calculated in Step 2. The formula becomes: Ending Retained Earnings = 0 + 14,000 – 11,890 – 2,000, resulting in an ending retained earnings of $110 for December 31.