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Problem 1-7A Analyzing transactions and preparing financial statements LO 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 $40,000 cash in the company.

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

3 The company purchased $1,890 of office equipment on credit.

5 The company paid $750 cash for this month’s cleaning services.

8 The company provided consulting services for a client and immediately collected $5,400 cash.

12 The company provided $2,500 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 $2,500 cash payment for the services provided on May 12.

22 The company provided $3,200 of consulting services on credit.

25 The company received $3,200 cash payment for the services provided on May 22.

26 The company paid $1,890 cash for the office equipment purchased on May 3.

27 The company purchased $80 of office equipment on credit.

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 $1,400 cash from the company for personal use.

Problem 1-7A Part 2 and 3

2-a. Prepare income statement for May.
2-b. Prepare statement of owner's equity for May.
2-c. Prepare Balance Sheet for May 31.
3. Prepare statement of cash flows for May.

Answer 1

Solution is as follows: