Chapter 1, Problem 7APSA

To determine

Concept introduction:

Account Payables:

For delivered goods or services, the cash owed by the business that they are required to pay to their suppliers is called the account payables. In the balances sheet, the account payables are shown as liabilities.

Account Receivables:

For delivered goods or services, the cash owed by the customer that they need to pay to the business is called account payables. In the balances sheet, the account payables are shown as assets.

Asset:

A resource which will generate a cash flow in a future for an individual, company or corporation. It has an economic value and helps to reduce expenses, benefits the firm's operations and improve sales. Asset is mentioned on the credit side of the balance sheet.

Liabilities:

During the course of the business operations, an obligation or the company's debit that arises is known as liability. Liabilities such as mortgages, accounts payables, accrued expenses and loans are recorded on the right hand side of the balance sheet.

Equity:

Equity is the value of an asset less the amount of all liabilities on that asset. It can be represented with the accounting equation: Assets -Liabilities = Equity.

Income Statement:

The statement in which the profit and loss of a company is mentioned is called the income statement. In the income statement the revenues, expenses, net income, profit and loss will be mentioned. It is also a statement which gives us the effect of expenses and profit in a stipulated time period.

1. To write:

The statement showing addition and subtraction of each transaction for the month of May.

Explanation of Solution

Assets =Liabilities + Equity
Date	Cash	Accounts Receivable	Office Equipment	Accounts payable	G.Gram Capital	G.Gram Withdrawals	Revenues	Expenses
May 1	$40,000				$40,000
May 1	($2,200)							$2,200
May 3			$1,890	$1,890
May 5	($750)							$750
May 8	$5,400						$5,400
May 12		$2,500					$2,500
May 15	($750)							$750
May 20	$2,500	($2,500)
May 22		$3,200					$3,200
May 25	$3,200	($3,200)
May 26	($1,890)			($1,890)
May 27				$80				$80
May 28	($750)							$750
May 30	($300)							$300
May 30	($280)							$280
May 31	($1,400)					$1,400
Total	$42,780	$0	$1,890	$80	$40,000	$1,400	$11,100	$5,110

2. To write:

The income statement for the month of May