Question

HOMEWORK #3 Due February 7,5:00 pm 10 points Dr. McMuffin has a medical clinic formed as a corporation that provides specialty care services to patients. The balances in the accounts as of January 1, 2019 are as follows: Cash 68,000 122,000 71,200 Accounts Receivable Office Supplies Building Land Office Fixtures and Equipment Medical Instruments Accounts Payable 47,000 Notes Payable 44,000 Contributed Capital 6,200 Retained Earnings 87.000 Patient Service Revenue 51,000 Income Tax Expense 28,000 Compensation Expense 40,000 Insurance Expense 42,000 Utilities Expense Below are the business transactions for January for Dr. McMuffin's clinic: JANUARY Purchased Office Fixtures and Equipment for $20,000. The clinic paid $10,000 in cash and financed the remaining balance with debt by signing a note promising to pay in three years. Ignore interest. Received $65,000 of cash from an investor in exchange for shares of stock in the clinic. Billed clients $75,000 for services rendered. Of this amount, $10,000 was received in cash, and the balance was billed on account (due in 30 days). Received $25,000 from customers on previously billed medical services (i.e., medical services provided in 2018). 10 Purchased office supplies on account expected to last a few months for $2,000. Purchased medical instruments for $12,000 in cash. Received a $2,000 invoice for insurance coverage in January. The entire amount is due to be paid on February 26. You can consider this an Account Payable. Paid $5,000 in income taxes for taxes incurred during January. Paid suppliers $7,000 included in accounts payable. Paid Light Co. $3,000 for utilities used in the clinic during the month of January. 31 Paid employees $25,000 in salaries for work done during the month of January.

Answer 1

Credit Dr. McMuffin's Clinic Journal entries Date General Journal 1-Jan Office Fixtures and Equipment Cash Notes Payable Debit $ 20,000 $ $ 10,000 10,000 $ 65,000 2-Jan Cash Contributed Capital $ 65,000 $ 10,000 $ 65,000 Accounts Receivable $ 75,000 $ 25,000 8-Jan Cash Accounts Receivable $ 25,000 $ 2,000 10-Jan Office Supplies Accounts Payable $ 12,000 15-Jan Medical Instruments Cash $ 12,000 $ 2,000 20-Jan Insurance expense Accounts Payable $ 2,000 $ 5,000 26-Jan Income tax expense Cash $ 5,000 $ 7,000 27-Jan Accounts Payable Cash $ 7,000 $ 3,000 30-Jan Utilities expense Cash $ 3,000 $ 25,000 31-Jan Compensation expense Cash $ 25,000

Credit Date Credit Date Credit Date Debit Date Accounts Receivable $ 44,000 $ 65,000 8-Jan Dr. McMuffin's Clinic T Accounts Date Debit Date Cash Op bal $ 47,000 1-Jan 2-Jan $ 65,000 15-Jan 5-Jan $10,000 26-Jan 8-Jan $ 25,000 27-Jan 30-Jan 31-Jan Debit Date Office Supplies $ 6,200 $ 2,000 Debit Date Building $ 87,000 Op bal Op bal 5-Jan Op bal 10-Jan $ 25,000 $ 10,000 $ 12,000 $ 5,000 $ 7,000 $ 3,000 $ 25,000 Bal. Bal. $ 87,000 $ 85,000 Land $ 51,000 $ 8,200 Medical Instruments $40,000 $ 12,000 Office Fixtures and Equipment Op bal $ 28,000 1-Jan $ 20,000 Op bal Op bal 15-Jan Bal. Bal. Bal. $ 51,000 Accounts Payable Op bal $ 7,000 10-Jan 20-Jan $ 48,000 Notes Payable Op bal 1-Jan $ 52,000 Contributed Capital Op bal 2-Jan Retained Earnings Op bal $ 71,200 $ 42,000 $ 2,000 $ 2,000 $68,000 $10,000 $122,000 $ 65,000 27-Jan Bal. $ 39,000 $ 78,000 $ 71,200 Bal. Income tax expense $ 5,000 Bal. $187,000 Compensation expense $ 25,000 Bal. Insurance expense $ 2,000 5-Jan $ 75,000 26-Jan 31-Jan 20-Jan $ 75,000 Bal. $ 5,000 Bal. $ 25,000 Bal. $ 2,000 Utilities expense $3,000 30-Jan Bal $ 3,000

Dr. McMuffin's Clinic Balance Sheet As of January 31, 2019 Assets Current Assets Accounts Receivable Office Supplies Total Current Assets 85,000 84,000 8,200 177,200 Property, Plant & Equipment Building Land Office Fixtures and Equipment Medical Instruments Total Property, Plant & Equipment Total Assets 87,000 51,000 48,000 52,000 238,000 415,200 Liabilities & Stockholders Equity Current Liabilities Accounts Payable 39,000 Non-Current Liabilities Notes Payable Total Liabilities 78,000 117,000 Stockholders Equity Contributed Capital Retained Earnings 187,000 111,200 298,200 415,200 Total Liabilities & Stockholders Equity