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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 $43,500 cash in the company.
		1		The company rented a furnished office and paid $2,100 cash for May’s rent.
		3		The company purchased $1,910 of office equipment on credit.
		5		The company paid $770 cash for this month’s cleaning services.
		8		The company provided consulting services for a client and immediately collected $5,100 cash.
		12		The company provided $2,600 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 $2,600 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 $1,910 cash for the office equipment purchased on May 3.
		27		The company purchased $80 of advertising in this month’s (May) local paper on credit; cash payment is due June 1.
		28		The company paid $730 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 $280 cash for this month’s utilities.
		31		G. Gram withdrew $1,500 cash from the company for personal use.

2.1. Prepare income statement for May.
The Gram CO.

Income Statement

For Month Ended May 31

Revenues: ___

___ ___

___ ___

___ ___

Expenses

___ ____ ____

Total expenses

____ ____

2.2. Prepare statement of owner's equity for May.
The Gram Co.

Statement of Owner's Equity

For Month Ended May 31

G. Gram, Capital, May 1 $0

___ ___

___ ___

___ ___

G. Gram, Capital, May 31 ____

2.3. Prepare Balance Sheet for May 31.
The Gram CO.

Balance Sheet

May 31

Assets Liabilities

3. Prepare statement of cash flows for May. (Cash outflows should be indicated with a minus sign.)
The Gram Co

Statement of Cash Flows

For Month Ended May 31

Cash flows from operating activites

Answer 1

		Asset			=	Liabilities	+	Stockholder's Equity
	Date	Cash	Office Equipment	Accounts Receivable	=	Accounts Payable	+	Capital	Retained Earnings
	May 1.	43500			=		+	43500
	May 1.	-2100			=		+		-2100
	May 3.		1910		=	1910	+
	May 5.	-770			=		+		-770
	May 8.	5100			=		+		5100
	May 12.			2600	=		+		2600
	May 15.	-730			=		+		-730
	May 20.	2600		-2600	=		+
	May 22.			3900	=		+		3900
	May 25.	3900		-3900	=		+
	May 26.	-1910			=	-1910	+
	May 27.				=	80	+		-80
	May 28.	-730			=		+		-730
	May 30.	-350			=		+		-350
	May 30.	-280			=		+		-280
	May 31.	-1500			=		+	-1500
	Total	46730	1910	0	=	80	+	42000	6560
		Income statement
	Revenues:
	Service revenues			11600
	Total (A)			11600
	Expenses
	Advertising expenses			80
	Rent expenses			2100
	Telephone charges			350
	Salaries expesnes			1460
	Cleaning services			770
	Utilities expense			280
	Total (B)			5040
	Net income (A)-(B)			6560
		Statement of changes in stockholder's equity
	Capital introduced			43500
	Less: Cash withdrawn			1500
	Ending common stock (A)			42000
	Beginning retained earnings			0
	Plus: Net income			6560
	Less: Dividend			0
	Ending retained earnings (B)			6560
	Total stockholder's equity (A)+(B)			48560
		Balance sheet
	Assets
	Cash			46730
	Accounts receivable			0
	Office equipment			1910
	Total assets			48640
	Liabilities
	Accounts payable			80
	Total liabilities			80
	Stockholder's equity
	Capital			42000
	Retained earnings			6560
	Total Stockholder's equity			48560
	Total liabilities and stockholder's equity			48640
		Statement of cashflows
	Cashflows from operating activities
	Net income			6560
	Increase/(Decrease) in Accounts payable			80
	Net cashflow from operating activities			6640
	Cashflows from investing activities
	Purchase of equipment			-1910
	Net cashflows from investing activities			-1910
	Cashflows from financing activities
	Capital introduced			43500
	Capital withdrawn			-1500
	Net cashflows from financing activities			42000
	Increase in cash			46730
	Beginning balance of cash			0
	Ending balance of cash			46730