This problem can be used in conjunction with Problem 2-57B. Refer to Problem 2-57B.

In Problem 2-57

Donald Healey operates and is the major stockholder of an interior design studio called DH Designers, Inc. The following amounts summarize the business on April 30, 20X1:

During May 20X1, the business completed these transactions:
a. Healey received $30,000 as a gift and deposited the cash in the business bank account.
The business issued common stock to Healey.
b. Paid $1,400 on accounts payable.
c. Performed services for a client and received cash of $4,100.
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, $5,000.
g. Received cash of $1,700 and issued common stock to a stockholder.
h. Recorded the following expenses for the month: (1) paid office rent-$1,200; (2) paid advertising-$600.
i. Declared and paid a cash dividend of $2,000.
Required
1. Journalize the transactions of DH Designers, Inc. Explanations are not required.
2. Set up the following T-accounts: Cash, Accounts Receivable, Supplies, Land, Accounts Payable, Common Stock, Retained Earnings, Dividends, Service Revenue, Rent Expense, and Advertising Expense. Insert in each account its balance as given (example: Cash $1,700). Post to the accounts.
3. Compute the balance in each account. For each asset account, each liability account, and for Common Stock, compare its balance to the ending balance you obtained in Problem 2 57B. Are the amounts the same or different?

Transcribed Image Text:

= Liabilities Stockholders' Equity Retained Cash + Receivable + Supplies + Land = Payable + Stock + Earnings 12,600 Accounts Accounts Bal 1,700 2,200 24,100 5,400 10,000