Question

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 of office equipment on credit. 5 The company paid $770 cash for this month's cleaning services. 8 The company provided consulting services for a client and immediately collected $5,800 cash. 12 The company provided $2,800 of consulting services for a client on credit. 15 The company paid $750 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 $3,900 of consulting services on credit. 25 The company received $3,900 cash payment for the services provided on May 22. 26 The company paid $5,650 cash for the office equipment purchased on May 3. 27 The company purchased $85 of advertising in this month's (May) local paper on credit; cash payment is due June 1. 28 The company paid $750 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 G. Gram withdrew $1,700 cash from the company for personal use.

Answer 1

Gram Co. Journal Enteries Date Particulars May-01 Cash a/c Dr. To G.Gram, Capital (Capital Invested) Debit in $ Credit in $ 41500 41500 Debit in $ Credit in $ 41500 5650 Dr. 2300 85 May-01 Rent Expense a/c To Cash (Rent paid) 2300 41500 Trial Balance for the Month ending May 31 Particulars Cash Accounts Receivable Office Equipment Accounts Payable G.Gram, Capital G.Gram, Withdrawals Consulting Revenue Rent Expense Maintainence expense Salary Expense Advertising Expense Telephone Expense Utilities Expense Totals 1700 12500 5650 May-03 Office Equipment a/c Dr. To Accounts Payable (Equipment on credit) 5650 2300 770 1500 770 May-05 Maintainence expense a/c Dr. To Cash (Cleaning expense paid) 300 280 770 54085 54085 5800 May-08 Cash a/c Dr. To Consulting Revenue (Services for cash) 5800 12500 2800 May-12 Accounts Receivable a/c Dr. To Consulting Revenue (Services on account) 2800 Statement of Income for the Month ending May 31 Consulting Revenue Less: Rent Expense Maintainence expense Salary Expense Advertising Expense Telephone Expense Utilities Expense Net Income 2300 770 1500 Dr. 750 May-15 Salary Expense a/c To Cash (Salary paid) 300 280 750 5235 7265 2800 May-20 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 2800 Statement of Owner's Equity for the Month ending May 31 G.Gram, Capital Net Income 3900 May-22 Accounts Receivable a/c Dr. To Consulting Revenue (Services on account) 41500 7265 48765 -1700 47065 3900 G.Gram, Withdrawals

Debit in $ Credit in $ 3900 Date Particulars May-25 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 3900 5650 May-26 Accounts Payable a/c Dr. To Cash (Creditors paid) 5650 May-27 Advertising Expense a/c Dr. To Accounts Payable (Expense accrued) Dr. 750 May-28 Salary Expense a/c To Cash (Salary paid) 750 300 May-30 Telephone Expense a/c Dr. To Cash (Expense paid) 300 Dr. 280 May-30 Utilities Expense a/c To Cash (Expense paid) 280 1700 May-31 G.Gram, Withdrawals a/c Dr. To Cash (Cash drawn for personal use) 1700

Balance sheet As at 31.12.2018 Assets Current Assets Cash Amounts in $ Amounts in $ Amounts in $ Amounts in $ Liabilities Current Liabilities 41500 Accounts Payable 85 Non Current Assets Office Equipment Total Assets Owner's Equity 5650 G.Gram, Capital 47150 Total Liabilities & Equity 47065 47150 Statement of Casflows for the Month ending May 31 Cashflow from Operating Activity Cash from customers Cash for Expenses Cash generated from operating activity 12500 -5150 7350 Cashflow from Investing Activity Office Equipment Cash used for Investing activity -5650 -5650 41500 -1700 Cashflow from Financing Activity G.Gram, Capital G.Gram, Withdrawals Cash generated from Financing activity Net Increase in Cash Beginning Balance Ending Balance 39800 41500 41500