K. T. Barr operates and is the major stockholder of an interior design studio called Barr De-signers, Inc. The following amounts summarize the financial position of the business on April 30, 19X5:

During May 19X5 the following events occurred:a. Barr received \(\$ 12,000\) as a gift and deposited the cash in the business bank account. The busi-ness issued common stock to Barr.b. Paid off the beginning balance of accounts payable.c. Performed services for a client and received cash of \(\$ 1,100\).d. Collected cash from a customer on account, \(\$ 750\).e. Purchased supplies on account, \(\$ 720\).f. Consulted on the interior design of a major office building and billed the client for servicesrendered, \(\$ 5,000\).g. Received cash of \(\$ 1,700\) and issued common stock to Barr.h. Recorded the following business expenses for the month:(1) Paid office rent- \(\$ 1,200\).(2) Paid advertising- \(\$ 660\).

i. Sold supplies to another interior designer for \(\$ 80\) cash, which was the cost of the supplies.j. Declared and paid a cash dividend of \(\$ 2,400\).Required1. Analyze the effects of the above transactions on the accounting equation of Barr Designers,Inc. Adapt the format of Exhibit 1-6.2. Prepare the income statement of Barr Designers, Inc., for the month ended May 31, 19X5.List expenses in decreasing order by amount.3. Prepare the statement of retained earnings of Barr Designers, Inc., for the month ended May\(31,19 \mathrm{X} 5\).4. Prepare the balance sheet of Barr Designers, Inc., at May 31.5. What did you learn from working this problem?6. How will what you learned help you manage a business?

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Assets Accounts Cash Receivable +Supplies + Land Bal. 1,720 2,240 24,100 = Liabilities + Stockholders' Equity Accounts Common = Payable + Retained Stock Earnings 5,400 10,000 12,660