Problem 1-7A - Part 1

Assets = Liabilities + Equity
Date	Cash	+	Accounts Receivable	+	Office Equipment	=	Accounts

Payable	+	Common Stock	-	Dividends	+	Revenues	-	Expenses
May	1	+$40,000	=	+	$40,000
1	- 2,200	=	-	$2,200 Rent
3	+	$1,890	=	+ $1,890
5	- 750	=	-	750 Cleaning
8	+ 5,400	=	+	$5,400
12	+	$2,500	=	+	2,500
15	- 750	=	-	750 Salary
20	+ 2,500	-	2,500	=
22	+	3,200	=	+	3,200
25	+ 3,200	-	3,200	=
26	- 1,890	=	- 1,890
27	+	80	=	+ 80
28	- 750	=	-	750 Salary
30	- 300	=	-	300 Telephone
30	- 280	=	-	280 Utilities
31	- 1,400	=	-	$1,400
$42,780	+	$ 0	+	$1,970	=	$ 80	+	$40,000	-	$1,400	+	$11,100	-	$5,030

Problem 1-7A (Continued)

Part 2

The Gram Co.

Income Statement

For Month Ended May 31

Revenues

280

Total expenses	5,030

Net income	$ 6,070

The Gram Co.

Statement of Retained Earnings

For Month Ended May 31

Retained earnings, May 1	$ 0

Add:	Net income	6,070

6,070

Less:	Dividends	1,400

Retained earnings, May 31	$ 4,670

The Gram Co.

Balance Sheet

May 31

Assets	Liabilities

Cash	$42,780	Accounts payable	$ 80

Office equipment	1,970	Equity

Common stock	40,000

Retained earnings	4,670

Total equity	44,670

Total assets	$44,750	Total liabilities and equity	$44,750

Problem 1-7A (Concluded)

Part 3

The Gram Co.

Statement of Cash Flows

For Month Ended May 31

Cash flows from operating activities
Cash received from customers	$11,100
Cash paid for rent	(2,200)
Cash paid for cleaning	(750)
Cash paid for telephone	(300)
Cash paid for utilities	(280)
Cash paid to employees	(1,500)
Net cash provided by operating activities	$ 6,070
Cash flows from investing activities
Cash paid for equipment	(1,890)
Net cash used by investing activities	(1,890)
Cash flows from financing activities
Cash investment from shareholder	40,000
Cash dividend to shareholder	(1,400)
Net cash provided by financing activities	38,600
Net increase in cash	$42,780
Cash balance, May 1	0
Cash balance, May 31	$42,780