ACCOUNTING
BASIC ACCOUNTING CYCLE
Dudley Haas operates and is the major stockholder of an interior design studio called Haas Interiors, Inc. The following amounts summarize the financial position of the business on August 31, 2009.
Assets = Liabilities + Stockholder's Equity
Cash + Accounts Receivable + Supplies + Land = Accounts Payable Common Stock Retained Earnings
1,250 1,500 12,000 8,000 4,000 2,750
During September 2009, the business completed these transactions:
a. Haas inherited $9,000 and deposited the cash in the business bank account. The business issued common stock to Haas.
b. Performed services for a client and received cash of $6,700.
c. Paid $5,000 on accounts payable.
d. Purchased supplies on account, $1,000.
e. Collected cash from a customer on account, $500.
f. Received cash of $1,000 and issued common stock to Haas.
g. Consulted on the interior design of a major office building and billed the client for services rendered, $2,400.
h. Recorded the following business expenses for the month: (1) paid office rent - $900; (2) paid advertising.- $300.
i. Declared and paid a cash dividend of $1,800.
REQUIRED
1. Journalize the transactions of Haas Interiors, 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 $1,250). Post the transactions to the accounts.
3. Compute the balance in each account.
4. Prepare the income statement of Haas Interiors, Inc., for the month ended September 30, 2009. List expenses in decreasing order by amount.
5. Prepare the entity's statement of retained earnings for the month ended September 30, 2009. 6, Prepare the balance sheet of Haas Interiors, Inc. at September 30, 2009.