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

THE GRAM CO.
Income Statement
For Month Ended May 31
Revenues:
Consulting fees revenue ($5700+2800+3000)		$11500
Expenses:
Rent expense	-2200
Cleaning expense	-740
Salary expense (730+730)	-1460
Telephone expense	-300
Utilities expense	-280
Total expenses		-4980
Net income		$6520

THE GRAM CO.
Statement of Retained earnings
For Month Ended May 31
Retained earnings, May 1	$0
Add: Net income	6520
	6520
Less: Dividends	-1500
Retained earnings, May 31	$5020

THE GRAM CO.
Balance Sheet
May 31
Assets		Liabilities
Cash	$45600	Accounts payable	$85
Accounts receivable	0	Equity
Office equipment	2005	Common stock	42500
		Retained earnings	5020
Total assets	$47605	Total liabilities and equity	$47605

Cash= $42500-2200-740+5700-730+2800+3000-1920-730-300-280-1500= $45600

Accounts receivable= $2800-2800+3000-3000= $0

Office equipment= $1920+85= $2005

Accounts payable= $1920-1920+85= $85

Common stock= $42500

THE GRAM CO.
Statement of Cash Flows
For Month Ended May 31
Cash flow from Operating activities:
Cash received from customers	$11500
Cash paid for rent	-2200
Cash paid for cleaning services	-740
Cash paid to employees (730+730)	-1460
Cash paid for telephone	-300
Cash paid for utilities	-280
Net cash provided by operating activities		6520
Cash flow from Investing activities:
Purchase of office equipment
Net cash used in investing activities	-1920
		-1920
Cash flow from financing activities:
Investment by shareholder	42500
Dividend paid	-1500
Net cash provided by financing activities		41000
Net increase (decrease) in cash (6520-1920+41000)		45600
Add: Beginning cash balance		0
Ending cash balance		$45600