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 $43,000 cash in the company in exchange for its common stock. 1 The company rented a furnished office and paid $2,500 cash for May's rent.. 3 The company purchased $1,910 of office equipment on credit. 5 The company paid $780 cash for this month's cleaning services. 8 The company provided consulting services for a client and immediately collected $5,200 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 $3,700 of consulting services on credit. 25 The company received $3,700 cash payment for the services provided on May 22. 26 The company paid $1,910 cash for the office equipment purchased on May 3. 27 The company purchased $75 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 $350 cash for this month's telephone bill. 30 The company paid $260 cash for this month's utilities. 31 The company paid $1,500 cash in dividends to the owner (sole shareholder). Problem 1-7A Part 2 Required: 2. Enter the amount of each transaction on individual items of the accounting equation. Do not determine new account balances after each transaction. (Enter the transactions in the given order. Enter reductions to account balances with a minus sign.) + Assets Accounts Receivable = Office Equipment ont = Liabilities Accounts Payable Equity Dividends + Revenues - Expenses - Date May Cash + $ 43,000 + (2,500) Common Stock $ (43,000) 1 + 2,500 1,910 = (1,910) + 780 (780)| + 5,200 (5,200) (2,800) 2.800 (750) + 2,800 + (2,800) + 3,700 + (3,700) + (3,700) 3,700 + (1,910) + 1,910 (75) + + (750) + (350)| + (260) + (1,500)| + $ 45,900 + 260 1,500 1,500 $ 0 + $ 1,910 = $ (75) + $ (43,000) - $ + (11.700) - $ 5,465 Problem 1-7A Part 3 3-a. Prepare income statement for May. THE GRAM CO. Income Statement For Month Ended May 31 Revenues: Expenses Total expenses 3-b. Prepare statement of retained earnings for May. THE GRAM CO. Statement of Retained Earnings For Month Ended May 31 Retained earnings, May 1 Retained earnings, May 31 3-c. Prepare Balance Sheet for May 31. THE GRAM CO. Balance Sheet May 31 Assets Liabilities Equity Total assets Total liabilities and equity
