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 $41,000 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 $1,880 of equipment on credit. May 5 The company paid $730 cash for this month's cleaning services. May 8 The company provided consulting services for a client and immediately collected $5,900 cash. May 12 The company provided $2,700 of consulting services for a client on credit. May 15 The company paid $720 cash for an assistant's salary for the first half of this month. May 20 The company received $2,700 cash payment for the services provided on May 12. May 22 The company provided $3,600 of consulting services on credit. May 25 The company received $3,600 cash payment for the services provided on May 22. May 26 The company paid $1,880 cash for the equipment purchased on May 3. May 27 The company purchased $85 of equipment on credit. May 28 The company paid $720 cash for an assistant's salary for the second half of this month. May 30 The company paid $350 cash for this month's telephone bill. May 30 The company paid $290 cash for this month's utilities. May 31 The company paid $1,700 cash in dividends to the owner (sole shareholder).
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
![Required information
Problem 1-7A (Algo) 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 $41,000 cash in the company
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 $1,880 of equipment on credit.
May 5 The company paid $730 cash for this month's cleaning services.
May 8 The company provided consulting services for a client and immediately collected $5,900 cash.
May 12 The company provided $2,700 of consulting services for a client on credit.
May The company paid $720 cash for an assistant's salary for the first half of this month.
May 20 The company received $2,700 cash payment for the services provided on May 12.
May The
company provided $3,600 of consulting services on credit.
May 25 The company received $3,600 cash payment for
May 26 The company paid $1,880 cash for the equipment purchased on May 3.
May 27 The company purchased $85 of equipment on credit.
May 28 The company paid $720 cash for an assistant's salary for the second half of this month.
May 30 The company paid $350 cash for this month's telephone bill.
May 30 The company paid $290 cash for this month's utilities.
May 31 The company paid $1,700 cash in dividends to the owner (sole shareholder).
Problem 1-7A (Algo) Part 1
services provided on May 22.
Required:
1. Enter the amount of each transaction on individual items of the accounting equation. (Enter the transactions in the given order.
Enter reductions to account balances with a minus sign. Select "NA" for account titles if the transaction does not include an
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