Gabi Gram started The Gram Company, a new business that began operations on May 1. The Gram Company completed the following transactions during its first month of operations. May 1 G. Gram invested $40,000 cash in the company in exchange for its common stock. May 1 The company rented a furnished office and paid $2,200 cash for May's rent. May 3 The company purchased $1,890 of equipment on credit. May 5 The company paid $750 cash for this month's cleaning services. Hay 8 The company provided consulting services for a client and immediately collected $5,400 cash. May 12 The company provided $2,588 of consulting services for a client on credit. May 15 The company paid $750 cash for an assistant's salary for the first half of this month. May 28 The company received $2,500 cash payment for the services provided on May 12. May 22 The company provided $3,288 of consulting services on credit. May 25 The company received $3,200 cash payment for the services provided on May 22. May 26 The company paid $1,890 cash for the equipment purchased on May 3. May 27 The company purchased $80 of equipment on credit. May 28 The company paid $750 cash for an assistant's salary for the second half of this month. May 38 The company paid $300 cash for this month's telephone bill. May 38 The company paid $280 cash for this month's utilities. May 31 The company paid $1,400 cash in dividends to the owner (sole shareholder). Complete this question by entering your answers in the ta Required 2A Required 2B Required 2C Required 3 2-a. Prepare the income statement for May. 2-b. Prepare the statement of retained earnings for May. 2-c. Prepare the balance sheet for May 31. 3. Prepare the statement of cash flows for May. Complete this question by entering your answers in the tabs below. Required 2A Required 2B Required 2C Required 3 Prepare the income statement for May. THE GRAM COMPANY Income Statement For Month Ended May 31 Revenues: Consulting services revenue Expenses Rent expense (2.200) Cleaning expense (750) Salaries expense (1,500) Telephone expense (300) Utilities expense (280) Total expenses Net income Prepare the statement of retained earnings for May. THE GRAM COMPANY Statement of Retained Earnings For Month Ended May 31 Retained earnings, May 1 $ 11,100 Add: Net income (5.030) $ 6,070 $ 0 6,070 6,070 Less: Dividends 1,400 Retained earnings, May 31 $ 4,670 Cash Equipment Total assets Assets THE GRAM COMPANY Balance Sheet May 31 THE GRAM COMPANY Statement of Cash Flows For Month Ended May 31 Cash flows from operating activities Cash received from customers 11,100 Cash paid to employees (1,500) Cash paid for utilities (280) Cash paid for telephone (300) Liabilities Cash paid for rent (2,200) $ 42,780 Accounts payable $ 80 Cash paid for cleaning (750) 1,970 0 Total liabilities 80 Cash flows from investing activities Cash paid for equipment (1,890) S 6,070 Equity (1,890) Common stock 40,000 Cash flows from financing activities Cash dividend to shareholder Cash investment from shareholder (1,400) 40,000 Retained earnings 4,670 Total equity 44,670 38,600 Net increase in cash $ 42,780 $ 44,750 Total liabilities and equity $ 44,750 Cash balance, May 1 0 Cash balance, May 31 $ 42,780

Gabi Gram started The Gram Company, a new business that began operations on May 1. The Gram Company completed the following transactions during its first month of operations. May 1 G. Gram invested $40,000 cash in the company in exchange for its common stock. May 1 The company rented a furnished office and paid $2,200 cash for May's rent. May 3 The company purchased $1,890 of equipment on credit. May 5 The company paid $750 cash for this month's cleaning services. Hay 8 The company provided consulting services for a client and immediately collected $5,400 cash. May 12 The company provided $2,588 of consulting services for a client on credit. May 15 The company paid $750 cash for an assistant's salary for the first half of this month. May 28 The company received $2,500 cash payment for the services provided on May 12. May 22 The company provided $3,288 of consulting services on credit. May 25 The company received $3,200 cash payment for the services provided on May 22. May 26 The company paid $1,890 cash for the equipment purchased on May 3. May 27 The company purchased $80 of equipment on credit. May 28 The company paid $750 cash for an assistant's salary for the second half of this month. May 38 The company paid $300 cash for this month's telephone bill. May 38 The company paid $280 cash for this month's utilities. May 31 The company paid $1,400 cash in dividends to the owner (sole shareholder). Complete this question by entering your answers in the ta Required 2A Required 2B Required 2C Required 3 2-a. Prepare the income statement for May. 2-b. Prepare the statement of retained earnings for May. 2-c. Prepare the balance sheet for May 31. 3. Prepare the statement of cash flows for May. Complete this question by entering your answers in the tabs below. Required 2A Required 2B Required 2C Required 3 Prepare the income statement for May. THE GRAM COMPANY Income Statement For Month Ended May 31 Revenues: Consulting services revenue Expenses Rent expense (2.200) Cleaning expense (750) Salaries expense (1,500) Telephone expense (300) Utilities expense (280) Total expenses Net income Prepare the statement of retained earnings for May. THE GRAM COMPANY Statement of Retained Earnings For Month Ended May 31 Retained earnings, May 1 $ 11,100 Add: Net income (5.030) $ 6,070 $ 0 6,070 6,070 Less: Dividends 1,400 Retained earnings, May 31 $ 4,670 Cash Equipment Total assets Assets THE GRAM COMPANY Balance Sheet May 31 THE GRAM COMPANY Statement of Cash Flows For Month Ended May 31 Cash flows from operating activities Cash received from customers 11,100 Cash paid to employees (1,500) Cash paid for utilities (280) Cash paid for telephone (300) Liabilities Cash paid for rent (2,200) $ 42,780 Accounts payable $ 80 Cash paid for cleaning (750) 1,970 0 Total liabilities 80 Cash flows from investing activities Cash paid for equipment (1,890) S 6,070 Equity (1,890) Common stock 40,000 Cash flows from financing activities Cash dividend to shareholder Cash investment from shareholder (1,400) 40,000 Retained earnings 4,670 Total equity 44,670 38,600 Net increase in cash $ 42,780 $ 44,750 Total liabilities and equity $ 44,750 Cash balance, May 1 0 Cash balance, May 31 $ 42,780

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Gabi Gram started The Gram Company, a new business that began operations on May 1. The Gram Company completed the following transactions during its first month of operations.

May 1	G. Gram invested $40,000 cash in the company in exchange for its common stock.
May 1	The company rented a furnished office and paid $2,200 cash for May’s rent.
May 3	The company purchased $1,890 of equipment on credit.
May 5	The company paid $750 cash for this month’s cleaning services.
May 8	The company provided consulting services for a client and immediately collected $5,400 cash.
May 12	The company provided $2,500 of consulting services for a client on credit.
May 15	The company paid $750 cash for an assistant’s salary for the first half of this month.
May 20	The company received $2,500 cash payment for the services provided on May 12.
May 22	The company provided $3,200 of consulting services on credit.
May 25	The company received $3,200 cash payment for the services provided on May 22.
May 26	The company paid $1,890 cash for the equipment purchased on May 3.
May 27	The company purchased $80 of equipment on credit.
May 28	The company paid $750 cash for an assistant’s salary for the second half of this month.
May 30	The company paid $300 cash for this month’s telephone bill.
May 30	The company paid $280 cash for this month’s utilities.
May 31	The company paid $1,400 cash in dividends to the owner (sole shareholder).