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 $40,000 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 received $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 paid $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).
Required 3. Prepare the statement of cash flows for the month of May
Expenses paid in cash is $5,030 and the closing cash balance is $42,780.
Statement of cash flow
As of May 31
Cash flows from operating activities
Cash paid for expenditures
Net cash flow from operating activities
Cash flows from investing activities
Office equipment purchased
Net cash used in investing activities
Cash flows from financing activities
Common stock issued
Net Cash flows from financing activities
Net increase in cash
Cash balance, May 1
Cash balance, May 31
Identify how each of the following separate transactions 1 through 10 affects financial statements. For increases, place a “+” and the dollar amount in the column or columns. For decreases, place a “−” and the dollar amount in the column or columns. Some cells may contain both an increase (+) and a decrease (−) along with dollar amounts. The first transaction is completed as an example. Required
b. For the statement of cash flows, identify how each transaction affects cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.
1 Owner invests $800 cash in business in exchange for stock +800 +800 +800
2 Purchases $100 of supplies on credit
3 Buys equipment for $400 cash
4 Provides services for $900 cash
5 Pays $400 cash for rent incurred
6 Incurs $200 utilities costs on credit
7 Pays $300 cash for wages incurred
8 Pays $50 cash for dividends
9 Provides $600 services on credit
10 Collects $600 cash on accounts receivable
Question: Match each of the numbered descriptions 1 through 5 with the term or phrase it best reflects. Indicate your answer by writing the letter A through H for the term or phrase in the blank provided. A. Audit B. GAAP C. Ethics D. Tax accounting E. SEC F. Public accountants G. Net income H. IASB
1. An examination of an organization’s accounting system and its records that adds credibility to financial statements.
2. Amount a business earns in excess of all expenses and costs associated with its sales and revenues.
3. An accounting area that includes planning future transactions to minimize taxes paid.
4. Accounting professionals who provide services to many clients.
5. Principles that determine whether an action is right or wrong.
Key financial figures for Apple’s fiscal year ended September 26, 2015, follow.
Key Figure $ Millions
Liabilities + Equity . . . . . . . . . . . $290,479
Net income . . . . . . . . . . . . . . . . . 53,394
Revenues . . . . . . . . . . . . . . . . . . 233,715
Required 3. How much are total expenses for Apple for the year ended September 26, 2015?
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