Question

i ne Tollowing information applies to the questions aisplayed 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. 1 The company rented a furnished office and paid $2,2ee cash for May's rent. 3 The company purchased $1,868 of office equipment on credit. 5 The company paid $730 cash for this month's cleaning services. 8 The company provided consulting services for a client and immediately collected $5,888 cash. 12 The company provided $2,900 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 $2,900 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 $1,860 cash for the office equipment purchased on May 3. 27 The company purchased $80 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 $400 cash for this month's telephone bill. 30 The company paid $270 cash for this month's utilities. 31 G. Gram withdrew $1,700 cash from the company for personal use.

Answer 1

The balance sheet will be prepared in the following manner:

80 ASSETS Cash Accounts Receivables Equipment $ $ 80 The GRAM Co. Balance Sheet May 31 LIABILITIES & STOCKHOLDERS' EQUITY $46,480 Accounts Payable $ - Total Liabilities $ 1,940 STOCKHOLDER'S EQUITY Capital Account Retained Earnings Total Equity $48,420 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $40,800 $ 7,540 $ 48,340 $ 48,420 TOTAL ASSETS

Workings

Lets analyze the impact of each transaction by creating a simple table which we can use to create the balance sheet.

Cash 42,500 -2,200 -730 5,800 Date May 1 May 1 May 3 May 5 May 8 May 12 May 15 May 20 May 22 May 25 May 26 May 27 May 28 May 30 May 30 May 31 ASSETS LIABILITIES EQUITY Accounts Receivable Supplies Equipment Notes Payable Accounts Payable Capital Account Retained Earnings Withdrawals 42,500 -2,200 1,860 1,860 -730 5,800 2900 2,900 -730 -2900 3900 3,900 -3900 -1860 -730 2.900 3,900 -1,860 80 80 -730 -730 -400 -400 -270 -270 -1,700 -1,700 Balance 46,480 - 1,940 80 42,500 7,540 -1,700

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