roblem 17A KQuestions 12 of 2 The following information appl

roblem 1-7A KQuestions 1-2 (of 2) The following information applies to the questions displayed below) Holden Graham started The Graham Co, a new business that began operations on May 1. The Graham Co. completed the following transactions during its first month of operations. May 1 H. Graham invested $40,000 cash in the company in exchange for its common stock. 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 recelved $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 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 pald $300 cash for this month\'s telephone bill. 30 The company paid $280 cash for this month\'s utilities 31 The company paid $1,400 cash in dividends to the owner (sole shareholder).

Solution

The Graham Company Journal Entries May 31st Date Particular Amount(Dr) Amount(Cr) 1st May Cash A/c $      40,000.00    To Common Stock $                40,000.00 1st May Rent Expenses $        2,200.00    To Cash $                  2,200.00 3rd May Office Equipment $        1,890.00    To Accounts Payable $                  1,890.00 5th May Cleaning Expenses $            750.00 To Cash $                      750.00 8th May Cash A/c $        5,400.00 To Consulting Service Revenue $                  5,400.00 12th May Accounts Receivable $        2,500.00     To Consulting Service Revenue $                  2,500.00 15th May Salaries Expenses $            750.00    To Cash $                      750.00 20th May Cash A/c $        2,500.00    To Accounts Receivable $                  2,500.00 22nd May Accounts Receivable $        3,200.00     To Consulting Service Revenue $                  3,200.00 25th May Cash A/c $        3,200.00    To Accounts Receivable $                  3,200.00 26th May Accounts Payable $        1,890.00    To Cash $                  1,890.00 27th May Advertisement Expenses $              80.00    To Accounts Payable $                        80.00 28th May Salaries Expenses $            750.00    To Cash $                      750.00 30th May Telephone Expenses $            300.00    To Cash $                      300.00 30th May Utilities Expenses $            280.00    To Cash $                      280.00 31st May Dividend Paid $        1,400.00    To Cash $                  1,400.00 The Graham Company Income Statement For the Month ended May 31st Revenue Consulting Service Revenue($5400+$3200+$2500) $                11,100.00 Expenses: Salaries Expenses($750+$750) $        1,500.00 Rent Expenses $        2,200.00 Cleaning Expenses $            750.00 Advertisement Expenses $              80.00 Telephone Expenses $            300.00 Utilities Expenses $            280.00 Total Expenses $                  5,110.00 Net Income $                  5,990.00 The Graham Company Statement of Retained Earnings For the Month ended May 31st Beginning Retained Earnings $                     -   Add: Net Income $        5,990.00 Less: dividend Paid $        1,400.00 Ending Retained Earnings $        4,590.00 The Graham Company Balance Sheet as at May31st Assets Amount Liabilities Amount Cash($40000-$2200-$750+$5400-$750+$2500+$3200-$1890-$750-$300-$280-$1400) $      42,780.00 Accounts Payable $          80.00 Office Equipment $        1,890.00 Equity Common Stock $ 40,000.00 Retained Earnings $    4,590.00 Total $      44,670.00 $ 44,670.00 The Graham Company Statement of Cash flow (Direct Method) May31st Cash Flow from Operating Activity Cash collected from customers $      11,100.00 Cash Paid for Rent $      (2,200.00) Cash Paid for Salaries $      (1,500.00) Cash Paid for cleaning Expenses $          (750.00) Cash Paid for Utilites Expenses $          (280.00) Cash Paid for telephone Expenses $          (300.00) $                  6,070.00 Cash Flow from Investing Activity Purchase of Office Equipment $      (1,890.00) $                (1,890.00) Cash flow from Financing Activity Cash Invested by H.Graham $      40,000.00 Dividend Paid $      (1,400.00) $                38,600.00 Opening Cash Balance $                               -   Ending Cash Balance $                42,780.00