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Vlad1618 [11]
2 years ago
7

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.
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 G. Gram withdrew $1,400 cash from the company for personal use.

Required
a. Show effects of the transactions on the accounts of the accounting equation by recording increases and decreases in the appropriate columns.
b. Prepare an income statement for May, a statement of owner’s equity for May, a May 31 balance sheet, and a statement of cash flows for May.
Business
1 answer:
shusha [124]2 years ago
4 0

Answer:

1. Asset and capital will increase

2. Current asset decrease

3. Asset and liability increase

4. Asset decrease

5. Asset increase

6. Asset increase

7. Asset decrease, expense increase

8. Asset increase

9. Asset increase

10. Asset decrease, liability decrease

11. Liability increased

12. Asset decrease

13. Asset decrease

14. Capital decrease

Explanation:

<u>Income Statement for the month of May:</u>

Sales Revenue $11,100

Less: Operating Expenses:

Cleaning service $750

Salary expense $750

Advertising expense $80

Salaries expense $750

Telephone bill $300

Utilities expense $280

Net Profit $8,190

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On July 1, 2019, Ted, age 73 and single, sells his personal residence of the last 30 years for $368,000. Ted’s basis in his resi
olga_2 [115]

Answer:

Realized gain is $297,144

Recognized gain is $47,144

Adjusted basis for new residence is $175,000

Explanation:

•Ted's Realized gain:

Sales price $368,000 - basis $48,776 - expenses $22,080 = $297,144.

• Ted's Recognized gain:

Realized gain $297,144 - exclusion upto $250,000 = $47,144.

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This information is available for the Automotive and Other Operations Divisions of General Motors Corporation for 2006. General
Paraphin [41]

Answer:

A. Inventory turnover ratio = 5.927

B. Current ratio = 0.95

C. Current ratio after adjusting for the LIFO reserve =  0.97

Explanation:

Requirement A

We know,

Inventory turnover ratio = Cost of goods sold ÷ Average inventory

Given,

Cost of goods sold = 164,682

Average inventory = Beginning inventory + Ending inventory

Average inventory = $13,862 + $13,921

Average inventory = $27,783

Putting the values into the formula, we will get

Inventory turnover ratio = Cost of goods sold ÷ Average inventory

Inventory turnover ratio = $164,682 ÷ $27,783

Inventory turnover ratio = 5.927

We know,

Days in inventory = $365 ÷ $5.927

Days in inventory = 61.6 days

Requirement B

We know,

Current ratio = Current asset ÷ Current liabilities

Given,

Current asset = $64,131

Current liabilities = $67,822

Putting the values into the formula, we can get

Current ratio = Current asset ÷ Current liabilities

Current ratio = $64,131 ÷ $67,822

Current ratio = 0.95

We know,

The current ratio shows us how a company pays its current liabilities.

We assume the inventory is reported in the current asset using the LIFO method.

Requirement C

We know,

Current ratio after adjusting for the LIFO reserve = (Current asset + LIFO reserve) ÷ Current liabilities.

Given,

Current asset = $64,131

LIFO reserve = 1,508

Current liabilities = $67,822

Putting the values into the formula, we can get

Current ratio after adjusting for the LIFO reserve = (Current asset + LIFO reserve) ÷ Current liabilities

Current ratio after adjusting for the LIFO reserve = ($64,131 + 1,508) ÷ $67,822

Current ratio after adjusting for the LIFO reserve = 65,639 ÷ $67,822 = 0.97

Current ratio after adjusting for the LIFO reserve =  0.97

8 0
2 years ago
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