Required information Problem 1-7A (Static) Analyzing transactions and preparing financial statements LO P1, P2 [The following information applies to the questions displayed below.] Gabi Gram started The Gram Company, a new business that began operations on May 1. The Gram Company completed the following transactions during its first month of operations. May 1 G. Gram invested $40,000 cash in the company in exchange for its common stock. May 1 The company rented a furnished office and paid $2,200 cash for May's rent. May 3 The company purchased $1,890 of equipment on credit. May 5 The company paid $750 cash for this month's cleaning services. May 8 The company provided consulting services for a client and immediately collected $5,400 cash. May 12 The company provided $2,500 of consulting services for a client on credit. May 15 The company paid $750 cash for an assistant's salary for the first half of this month. May 20 The company received $2,500 cash payment for the services provided on May 12. May 22 The company provided $3,200 of consulting services on credit.. May 25 The company received $3,200 cash payment for the services provided on May 22.. May 26 The company paid $1,890 cash for the equipment purchased on May 3. May 27 The company purchased $80 of equipment on credit. May 28 The company paid $750 cash for an assistant's salary for the second half of this month. May 30 The company paid $300 cash for this month's telephone bill. May 30 The company paid $280 cash for this month's utilities. May 31 The company paid $1,400 cash in dividends to the owner (sole shareholder). Problem 1-7A (Static) Part 2 and 3 2-a. Prepare the income statement for May 2-b. Prepare the statement of retained earnings for May. 2-c. Prepare the balance sheet for May 31. 3. Prepare the statement of cash flows for May Required 2A Required 2B Required 2C Required 3 Prepare the income statement for May. Revenues: THE GRAM COMPANY Income Statement For Month Ended May 31 Consulting services revenue 11,100 Expenses Cleaning expense 750 Rent expense 2,200 Salaries expense 5,030 Telephone expense 300 Utilities expense 3,200 1,970 Total expenses 13,450 Net income Required 2A Required 2B Required 2C Required 3 Prepare the statement of retained earnings for May. THE GRAM COMPANY Statement of Retained Earnings For Month Ended May 31 Retained earnings, May 1 Add: Net income $ 0 0 Less: Dividends (1,400) Retained earnings, May 31 $ (1,400) Required 2A Required 28 Required 2C Required 3 Prepare the balance sheet for May 31. THE GRAM COMPANY Balance Sheet May 31 Assets Liabilities Cash Equipment 42,780 Accounts payable 80 1,970 Accounts receivable Accounts payable Total liabilities 80 80 Equity Common stock 40,000 Retained earnings 42,780 Total equity 82,780 Total assets $ 44,830 Total liabilities and equity $ 82.860 Statement of Cash Flows For Month Ended May 31 Cash flows from operating activities Cash received from customers 42,780 Cash paid for cleaning 42,780 Cash paid for rent 5,030 Cash paid for telephone Cash paid for utilities Cash paid to employees Cash flows from investing activities Cash paid for equipment $ 90,590 Net cash used by investing activities Cash flows from financing activities Cash Cash paid for equipment Accounts payable Cash investment from shareholder 0 Cash paid to employees $ 90,590 Cash flows from investing activities Cash paid for equipment Net cash used by investing activities Cash flows from financing activities Cash Cash paid for equipment Accounts payable Cash investment from shareholder Cash balance, May 1 Cash balance, May 31 0 $ 90,590 0 $ 90,590 0 RECEIVED: May 1 $ 40,000 DIVER $ 40,000 May 1 (2,200) + 2.200 G May 3 + + 1,890 1,890 + - May 5 (750) + + 750 ed May 8 5,400 . May 12 2,500 5,400- 2.500 - May 15 (750) + 750 May 2,500 ( 20 (2,500) + May 3,200 22 3,200 May 3,200 ( 25 (3,200) + - May 26 (1,890) (1,890) - May 4 80 M 80+ 27 May " 28 (750) + . 750 May 30 (300) + + May 30 (280) S + + + 300 - 280 O May 30 (1,400) + . + 4 S 42,780 1- 1,400 $ 1,970 $ 80 + $40,000 $ 1,400 $ 11,100 S 5,030