Requirement 2.1:
THE GRAM CO. | ||
Income Statement | ||
For Month Ended May 31 | ||
Revenues: | ||
Service revenue | $12,500 | |
Expenses: | ||
Rent expense | $2,300 | |
Cleaning expenses | $730 | |
Salaries expense | $1,580 | |
Advertising expense | $85 | |
Telephone expense | $300 | |
Utilities expense | $280 | |
Total expenses | $5,275 | |
Net income | $7,225 |
Requirement 2.2:
THE GRAM CO. | |
Statement of Retained Earnings | |
For Month Ended May 31 | |
Retained earnings, May 1 | $0 |
Net income | $7,225 |
Balance | $7,225 |
Dividends | ($1,900) |
Retained earnings, May 31 | $5,325 |
Requirement 2.3:
THE GRAM CO. | |||
Balance Sheet | |||
May 31 | |||
Assets | Liabilities | ||
Cash | $43,000 | Accounts payable | $85 |
Equipment | $5,410 | ||
Stockholder's equity: | |||
Common stock | $43,000 | ||
Retained earnings | $5,325 | ||
Total assets | $48,410 | Total liabilities and stockholders equity | $48,410 |
Requirement 2.4:
THE GRAM CO. | ||
Statement of Cash Flows | ||
For Month Ended May 31 | ||
Cash flows from operating activities: | ||
Payment for rent | ($2,300) | |
Cash paid for cleaning services | ($730) | |
Cash received for services provided | $5,700 | |
Cash paid for salaries (790+790) | ($1,580) | |
Cash collections from customers (2900+3900) | $6,800 | |
Cash paid for telephone bill | ($300) | |
Cash paid for utilities | ($280) | |
Net cash flows from operating activities (i) | $7,310 | |
Cash flows from investing activities: | ||
Purchase of equipment | ($5,410) | |
Net cash flows from Investing activities (ii) | ($5,410) | |
Cash flows from financing activities: | ||
Issuance of common stock | $43,000 | |
Payment of cash dividends | ($1,900) | |
Net cash flows from financing activities (iii) | $41,100 | |
Net increase(decrease) in cash (i+ii+iii) | $43,000 | |
Cash balance, May 1 | $0 | |
Cash balance, May 31 | $43,000 |
Calculations:
T-Accounts:
Cash | Service revenue | |||
$43,000 | $2,300 | $5,700 | ||
$5,700 | $730 | $2,900 | ||
$2,900 | $790 | $3,900 | ||
$3,900 | $5,410 | Bal. $12,500 | ||
$790 | ||||
$300 | Salaries expense | |||
$280 | $790 | |||
$1,900 | $790 | |||
Bal. $43,000 | Bal. $1,580 | |||
Accounts receivable | ||||
$2,900 | $2,900 | |||
$3,900 | $3,900 | |||
Bal. $0 | ||||
Accounts payable | ||||
$5,410 | $5,410 | |||
$85 | ||||
Bal. $85 |
Required information Problem 1-7A Analyzing transactions and preparing financial statements LO C4, P1, P2 The following...
Required information Problem 1-7A Analyzing transactions and preparing financial statements LO C4, P1, P2 (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...
Required information Problem 1-7A Analyzing transactions and preparing financial statements LO C4, P1, P2 [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 $41,500 cash in the company. 1 The company rented a furnished office and paid $2,300 cash for May's rent. 3 The company purchased $5,650...
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Required information Problem 1-7A Analyzing transactions and preparing financial statements LO C4, P1, P2 [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 $40,000 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...
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Required information Problem 1-7A Analyzing transactions and preparing financial statements LO P1, P2 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 $40,000 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....
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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 $2,100 cash for May’s rent. 3 The company purchased $5,670 of office equipment on credit. 5...