Holden Graham started The Graham Co., a new business that began operations on May 1. Graham Co.

completed the following transactions during that first month:

May 1 H. Graham invested $40,000 cash in the business in exchange for common stock.

1 Rented a furnished office and paid $2,200 cash for May’s rent.

3 Purchased $1,890 of office equipment on credit.

5 Paid $750 cash for this month’s cleaning services.

8 Provided consulting services for a client and immediately collected $5,400 cash.

12 Provided $2,500 of consulting services for a client on credit.

15 Paid $750 cash for an assistant’s salary for the first half of this month.

20 Received $2,500 cash payment for the services provided on May 12.

22 Provided $3,200 of consulting services on credit.

25 Received $3,200 cash payment for the services provided on May 22.

26 Paid $1,890 cash for the office equipment purchased on May 3.

27 Purchased $80 of advertising in this month’s (May) local paper on credit; cash payment is due June 1.

28 Paid $750 cash for an assistant’s salary for the second half of this month.

30 Paid $300 cash for this month’s telephone bill.

30 Paid $280 cash for this month’s utilities.

31 Paid $1,400 cash for dividends.

Required 1 Arrange the following asset, liability, and equity titles in a table like Exhibit 1.9: Cash; Accounts Receivable; Office Equipment; Accounts Payable; Common Stock; Dividends; Revenues; and Expenses.

2 Show effects of the transactions on the accounts of the accounting equation by recording increases and decreases in the appropriate columns. Do not determine new account balances after each transaction.

Determine the final total for each account and verify that the equation is in balance.

3 Prepare an income statement for May, a statement of retained earnings for May, a May 31 balance sheet, and a statement of cash flows for May.