The following are the transactions relating to the formation of Gray Mowing Services Inc. and its first month of operations. a. The firm was organized and the initial stockholders invested cash of $900. b. The company borrowed $1,350 from a relative of one of the initial stockholders; a short-term note was signed. c. Two zero-turn lawn mowers costing $720 each and a professional trimmer costing $195 were purchased for cash. The original list price of each mower was $915, but a discount was received because the seller was having a sale. d. Gasoline, oil, and several packages of trash bags were purchased for cash of $135. e. Advertising flyers announcing the formation of the business and a newspaper ad were purchased. The cost of these items. $255. will be paid in 30 days. 1. During the first two weeks of operations, 47 lawns were mowed. The total revenue for this work was $1,058; $698 was collected in cash, and the balance will be received within 30 days. g. Employees were paid $630 for their work during the first two weeks. h. Additional gasoline, oil, and trash bags costing $165 were purchased for cash 1. In the last two weeks of the first month, revenues totaled $1,380, of which $563 was collected. J. Employee wages for the last two weeks totaled $765, these will be paid during the first week of the next month. k. It was determined that at the end of the month the cost of the gasoline, oll, and trosh bags still on hand was $45, 1. Customers pald a total of $225 due from mowing services provided during the first two weeks. The revenue for these services was recognized in transaction Required: a. Record each transaction in the appropriate columns, pridicate the financial statement effect. b. Calculate the total assets, liabilities, and owners' equity at the end of the month and calculate the amount of net income for the month c. After completing parts a through , prepare an income statement for Gray Mowing Services Inc. for the month presented and a balance sheet at the end of the month Record each transaction in the appropriate columns. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial sta Transaction LIABILITIES Notes Accounts Payable Payable Supplies - Equipment ASSETS Accounts Cash Recolvable 900 1.350 (1.635) (135) Pald-in Capital 900 STOCKHOLDERS' EQUITY Retained Earnings Revenue Expenses b 1.350 1.635 135 255 360 255 1,050 698 1830) (165) 560 650 165 817 1.380 765 (255) 765 255 1 225 1,171 1225) 052 45- +1.635 1350 1,020 9001 2.438 1.905 Here Required B > GRAY MOWING SERVICES INC. Balance Sheet $ Assets: Cash Accounts receivable Supplies Equipment 1,171 952 45 1,635 Total current assets 5 3,803 Total assets $ 5003 Liabilities: Accounts payable Notes payable $ 1,020 1,350 $ 2,370 Total liabilities Stockholders' Equity: Common stock Surplus/Net income $ $ 900 538 Total stockholders' equity Total liabilities and stockholders' equity 1,438 $ $ 3,808
