Question

Required information [The following information applies to the questions displayed below.) Gabi Gram started The Gram Co., a new business that began operations on May 1. The Gram Co. completed the following transactions during its first month of operations. May 1 G. Gram invested $42,500 cash in the company in exchange for its common stock. 1 The company rented a furnished office and paid $2,200 cash for May's rent. 3 The company purchased $1,920 of office equipment on credit. 5 The company paid $740 cash for this month's cleaning services. 8 The company provided consulting services for a client and immediately collected $5,700 cash. 12 The company provided $2,800 of consulting services for a client on credit 15 The company paid $730 cash for an assistant's salary for the first half of this month. 20 The company received $2,800 cash payment for the services provided on May 12. 22 The company provided $3,000 of consulting services on credit. 25 The company received $3,000 cash payment for the services provided on May 22. 26 The company paid $1,920 cash for the office equipment purchased on May 3. 27 The company purchased $85 of office equipment on credit. 28 The company paid $730 cash for an assistant's salary for the second half of this month. 30 The company paid $300 cash for this month's telephone bill. 30 The company paid $280 cash for this month's utilities. 31 The company paid $1,500 cash in dividends to the owner (sole shareholder).

Answer 1

	Solution:
		The Gram Co.
		Income Statement
		For the month ended May 31
		Particulars	$
		Sales	$        11,500
		Total Sales	$        11,500
		Less Expense:
		Cost of goods sold
		Cleaning Expense	$             740
		Utilities Expense	$             280
		Rent Expense	$          2,200
		Telephone Expense	$             300
		Salary Expense	$          1,460
		Total Expense	$          4,980
		Net Income	$          6,520
d		The Gram Co.
		Statement of Shareholder's Equity
		For the month ended May 31
			Share Capital	Retained Earnings	Total
		Balance, May 1	-	-	$                    -
		Add: Net Income for may	-	$                                     6,520	$              6,520
		Add: Issuance of Common Stock	$        42,500	-	$            42,500
		Less: Dividends paid	-	$                                   (1,500)	$            (1,500)
		Balance, May 1	$        42,500	$                                     5,020	$           47,520
		The Gram Co.
		Balance Sheet
		May 31
		Assets		Liabilities
		Particulars	$	Particulars	$
		Cash	45600	Accounts payable	85
		Office Equipment	2005
		Accounts Receivable	0
				Equities
				Common Stock	42500
				Retained Earnings	$              5,020
		Total assets	47605	Total Liabilities and equities	47605
	The Gram Co.
	CASH FLOW STATEMENT
		Particulars	$
	A	Cash flows from operating activities
		Net income	$          6,520
		Adjustments for non-cash effects:
		Depreciation expense	-
		Adjustments to reconcile net income cash
		Increase in Account payable	$85
		Net cash inflow from operating activities	$6,605
	B	Cash flows from investing activities
		Purchase of equipment	($2,005)
		Net cash ouflow from investing	($2,005)
	C	Cash flows from financing activities
		Common stock issued	$42,500
		Dividend paid	($1,500)
		Net cash inflow from financing activities	$41,000
		Net decrease in cash $	$45,600
		Cash at beginning of year	$0
		Cash at end of year	$45,600