University:
Michigan State University
Course:
ACC 300 | Intermediate Financial Accounting I
Academic year:

2021
Views:

368

Pages:

5
Author:

Hallie Randolph

PROBLEM 3.5B DR. CRAVATI, DMD 60 Minutes, Strong a. Income Statement Transaction Aug. 1 Aug. 4 Aug. 9 Aug. 16 Aug. 21 Aug. 24 Aug. 27 Aug. 28 Aug. 31 Revenue Expenses = NE NE NE NE NE I NE NE NE NE NE NE NE NE NE I NE I Balance Sheet Net Income Assets NE NE NE NE NE I D NE D P3.5B I I NE I NE I NE NE D Liabilities = NE I NE I NE NE I NE NE Owners' Equity I NE NE NE NE I D NE D PROBLEM 3.5B DR. CRAVATI, DMD (continued ) b. General Journal 2011 Au g . 1 Cash 280,000 Ca p ital Stock Issued 1,000 shares of capital stock. 280,000 4 Land Building Cash Notes Pa y able Purchased land and building. 9 16 21 24 60,000 340,000 80,000 320,000 Medical Instruments Cash Purchased medical instruments. 75,000 Office Fixtures and Equipment Cash Accounts Pa y able Purchased fixtures and equipment. 25,000 75,000 10,000 15,000 Office Supplies Cash Purchased office supplies. 4,200 4,200 Cash Accounts Receivable Service Revenue Recorded dental service revenue earned. 1,000 12,000 13,000 27 Advertising Expense Accounts Pa y able Recorded advertising expense incurred in Aug. 450 28 500 Cash 450 Accounts Receivable Collected cash for Aug. 24 services. 31 500 Salary Expense Cash Paid Aug. salary expense. 2,200 2,200 P3.5B (p.2) PROBLEM 3.5B DR. CRAVATI, DMD (continued) c. Au g. 1 Au g. 24 Au g. 28 Au g.31 Bal. Cash 280,000 Au g. 4 1,000 Au g. 9 500 Au g. 16 Aug. 21 Aug. 31 110,100 Accounts Receivable 12,000 Aug. 28 Au g. 24 Au g. 31 Bal. 11,500 Au g. 21 Office Supplies 4,200 Au g. 31 Bal. 500 Au g. 31 Bal. 320,000 Accounts Payable Aug. 16 Aug. 27 Au g. 31 Bal. 15,000 450 15,450 Capital Stock Au g. 1 280,000 Au g. 31 Bal. 280,000 Service Revenue Aug. 24 13,000 Au g. 31 Bal. 13,000 75,000 Office Fixtures and Eq uip ment 25,000 Au g. 27 Advertising Ex pense 450 450 Au g. 31 Bal. 25,000 Au g. 31 Bal. Au g. 4 Land 60,000 Au g. 31 Au g. 31 Bal. 60,000 Au g. 31 Bal. 2,200 Aug. 4 Building 340,000 Aug. 31 Bal. 340,000 Salary Expense P3.5B(p.3) 320,000 Au g. 31 Bal. 4,200 Medical Instruments 75,000 Au g. 9 Au g. 16 Notes Payable Aug. 4 80,000 75,000 10,000 4,200 2,200 2,200 PROBLEM 3.5B DR. CRAVATI, DMD (continued) d. DR. CRAVATI, DMD Trial Balance August 31, 2011 $ Cash Accounts receivable Office supplies Medical instruments Office fixtures and equipment Land Building Notes payable Accounts payable Capital stock Retained earnings Service revenue Advertising expense Salary expense 110,100 11,500 4,200 75,000 25,000 60,000 340,000 $ $ P3.5B(p.4) 450 2,200 628,450 $ 320,000 15,450 280,000 0 13,000 628,450 PROBLEM 3.5B DR. CRAVATI, DMD (concluded ) e. Total Assets: Cash Accounts receivable Office supplies Medical instruments $ 110,100 11,500 4,200 75,000 25,000 60,000 340,000 Office fixtures and equipment Land Building Total assets Total Liabilities: Notes payable Accounts payable $ $ 625,800 $ 335,450 $ 290,350 320,000 15,450 Total liabilities Total Owners' Equity: Total assets - total liabilities ($625,800 - $335,450) As shown below, the business was profitable in its first month of operations: Service revenue $ Less: Advertising expense $ Salary expense Net income (profit) 450 2,200 $ P3.5B (p.5) 13,000 2,650 10,350