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. 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, 20X1. List expenses in decreasing order by amount.
3. Prepare the statement of retained earnings of DH Designers, Inc., for the month ended May 31, 20X1.
4. Prepare the balance sheet of DH Designers, Inc., at May 31, 20X1.

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= 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