Exercise 1: The Graham Co.

began operations on May and completed the following transactions during its first month of op

THE GRAHAM CO.

Transactions

May
1 Cash invested in business $ 43,000
1 Cash paid for May rent 2,200
3 Office equipment purchased on credit 1,940
5 Cash paid for May cleaning services 750
8 Cash collected for services provided 5,800
12 Provided services on credit 2,800
15 Cash paid for assistant's salary (1st half of May) 850
20 Cash received for services provided May 12 2,800
22 Provided services on credit 4,000
25 Cash received for services provided May 22 4,000
26 Cash paid for office equipment purchased May 3 1,940
27 Purchased May advertising, payment due June 1 85
28 Cash paid for assistant's salary (2nd half of May) 850
30 Cash paid for May telephone bill 400
30 Cash paid for May utilities 260
31 Owner withdrew cash for personal use 2,000
tions during its first month of operations

THE GRAHAM CO.

Assets = Liabilities + Equity

Accounts Office Accounts H. Graham
Date Cash
Receivable Equipment Payable Capital
May 1 $43,000 $43,000
1 (2,200)
3 1,940 1,940
5 (750)
8 5,800
12 2,800 2,800
15 (850)
20 (2,800)
22 4,000
25 (4,000) (4,000)
26 (1,940) (1,940)
27 (85)
28 (850)
30 (400)
30 (260)
31 (2,000)

THE GRAHAM CO.

Income Statement
For the Month Ended May 31

Revenues:
Consulting services revenue
Expenses:

Net income

THE GRAHAM CO.

Statement of Owner's Equity
 For the Month Ended May 31

H. Graham, Capital, May 1

Add: Investment by Owner
Net income

Less: Withdrawals by Owner

H. Graham, Capital, May 31

THE GRAHAM CO.

Balance Sheet
May 31

Assets
Cash
Office equipment
Total assets

Liabilities
Accounts payable

Owner's Equity
H. Graham, Capital
Total liabilities and equity

THE GRAHAM CO.

Statement of Cash Flows
For Month Ended May 31

Cash flows from operating activities:

Net cash provided by operating activities

Cash flows from investing activities:

Net cash used by investing activities

Cash flows from financing activities:

Net cash provided by financing activities

Net increase in cash

Cash balance, May 1
Cash balance, May 31
O.

Equity
H. Graham
Revenues Expenses
Withdrawals

(2,200)

(750)
5,800

(850)
(2,800)
4,000

(85)
(850)
(400)
(260)
(2,000)
 ANDERSON ELECTRIC
Transactions

December
1 Transferred into business account $ 68,800
2 Cash paid for month's rent 1,800
3 Cash paid for electrical equipment 4,800
3 Total paid for electrical equipment 13,000
5 Cash paid for office supplies 1,000
6 Amount collected for work completed 1,600
8 Office equipment purchased on credit 2,680
15 Completed work on credit 6,000
18 Office supplies purchased on credit 360
20 Cash paid for office equipment purchased 2,680
December 8
24 Billed client for work completed 1,000
28 Received for December 15th work 6,000
29 Paid assistant's salary 1,500
30 Paid monthly utility bill 570
31 Withdrew for personal use 900

Q: Assume Helga Anderson contributed $49,000 cash and borrowed

the $19,800 difference from a bank. Explain the effect of this change on
total assets, liabilities, and equity.