Miranda Sykes operates an interior design studio called Sykes Design Studio. The following amounts summarize the financial position of the business on April 30, 2017:
During May 2017, the company did the following:
a. Sykes received $20,000 as a gift and deposited the cash in the business bank account.
b. Paid the beginning balance of accounts payable.
c. Performed services for a client and received cash of $5,000.
d. Collected cash from a customer on account, $4.000.
e. Purchased supplies on account, $3,000.
f. Consulted on the interior design of a major office building and billed the client for services rendered, $16,000.
g. Recorded the following business expenses for the month:
(1) Paid office rent for May 2017-$6,000.
(2) Paid advertising-$4,000.
h. Sold supplies to another interior designer for $1,000 cash, which was the cost of the supplies.
i. Sykes withdrew $7,000 cash for personal use.
Required
1. Analyze the effects of the above transactions on the accounting equation of Sykes Design Studio. Adapt the format of Exhibit 1-11, Panel B, on page 20.
2. Prepare the income statement of Sykes Design Studio for the month ended May 31, 2017. List expenses in decreasing order of amount.
3. Prepare the statement of owner’s equity of Sykes Design Studio for the month ended May 31, 2017.
4. Prepare the of Sykes Design Studio at May 31, 2017.
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