Doug Hanna operates and is the major shareholder of an

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Doug Hanna operates and is the major shareholder of an

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, 2017:

During May 2017, 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

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 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, 2017. List
expenses in decreasing order by amount.

3. Prepare the statement of retained earnings of DH Designers, Inc. for the month ended May
31, 2017.

4. Prepare the balance sheet of DH Designers, Inc. at May 31, 2017.

Doug Hanna operates and is the major shareholder of an

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