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 $40,500 cash in the company. 1 The company rented a furnished office and paid $2,200 cash for May's rent. 3 The company purchased $6,190 of office equipment on credit. 5 The company paid $730 cash for this month's cleaning services. 8 The company provided consulting services for a client and immediately collected $5,800 cash. 12 The company provided $3,000 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 $3,000 cash payment for the services provided on May 12. 22 The company provided $4,000 of consulting services on credit. 25 The company received $4,000 cash payment for the services provided on May 22. 26 The company paid $6,190 cash for the office equipment purchased on May 3. 27 The company purchased $85 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 $300 cash for this month's telephone bill. 30 The company paid $280 cash for this month's utilities. 31 G. Gram withdrew $1,600 cash from the company for personal use. Problem 1-7A Part 2 and 3 2.1. Prepare income statement for May. THE GRAM CO. Income Statement For Month Ended May 31 Revenues: Consulting services revenue Expenses Rent expense Cleaning expense Salaries expense Telephone expense Utilities expense 300 Total expenses 300 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 $ Add: Net income 0 0 G. Gram, Capital, May 31 $ 0 2.3. Prepare Balance Sheet for May 31. THE GRAM CO. Balance Sheet May 31 Assets Liabilities Cash Accounts payable Equity Office equipment Total assets $ 0 Total liabilities and equity $ o 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 activities Cash received from customers Consulting services revenue Cash paid for cleaning Cash paid for rent Cash paid to employees Cash paid for telephone Cash paid for utilities 5,600 5,300 (780) (2,400) (1,580) (300) (250) $ 5,590 Net cash used by operating activities Cash flows from investing activities Office supplies (1.940) (1.940) 1940) Cash flows from financing activities $ $ Cash balance, May 1 Cash balance, May 31 3,650 0 3,650 $