Doug Hanna operates and is the major shareholder of an interior design studio called DH Designers, Inc.

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Doug Hanna operates and is the major shareholder of an interior design studio called DH Designers, Inc. The following amounts summarize the financial position of the business on April 30, 2014:

Doug Hanna operates and is the major shareholder of an

During May 2014, the business completed these transactions:
a. Hanna received $30,000 as a gift and deposited the cash in the business bank account. The business issued common shares to Hanna.
b. Paid $1,000 on accounts payable.
c. Performed services for a client and received cash of $5,100.
d. Collected cash from a customer on account, $700.
e. Purchased supplies on account, $800.
f. Consulted on the interior design of a major office building and billed the client for services rendered, $15,000.
g. Received cash of $1,700 and issued common shares to a shareholder.
h. Recorded the following expenses for the month: paid office rent, $2,100; paid advertising, $1,600.
i. Declared and paid a cash dividend of $2,000.
Requirements
In order to guide Doug Hanna:
1. Analyze the effects of the preceding transactions on the accounting equation of DH Designers, Inc. Adapt the format of Exhibit 2-1 , Panel B.
2. Prepare the income statement of DH Designers, Inc. for the month ended May 31, 2014. List expenses in decreasing order by amount.
3. Prepare the statement of retained earnings of DH Designers, Inc. for the month ended May 31, 2014.
4. Prepare the balance sheet of DH Designers, Inc. at May 31, 2014.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Financial Accounting

ISBN: 978-0133472264

5th Canadian edition

Authors: Charles Horngren, William Thomas, Walter Harrison, Greg Berberich, Catherine Seguin

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