Question

Nancy Jackson, D.D.S., opened a dental practice on January 1, 2020. During the first month of operations, the following transactions occurred.

1.		Performed services for patients who had dental plan insurance. At January 31, $771 of such services was performed but not yet billed to the insurance companies.
2.		Utility expenses incurred but not paid prior to January 31 totaled $548.
3.		Purchased dental equipment on January 1 for $77,000, paying $20,000 in cash and signing a $57,000, 3-year note payable. (a) The equipment depreciates $376 per month. (b) Interest is $460 per month.
4.		Purchased a one-year malpractice insurance policy on January 1 for $12,720.
5.		Purchased $1,732 of dental supplies. On January 31, determined that $490 of supplies were on hand.

Prepare the adjusting entries on January 31. Account titles are Accumulated Depreciation—Equipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense, Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities Expenses, and Accounts Payable.

Answer 1

Adjusting entries:
S.no.	Accounts title and explanations				Debit $	Credit $
1	Accounts receivable				771
	Service revenue					771
	(for services rendered but not recorded)
2	Utilities expenses				548
	utilities payable					548
	(for utilities expenses payable)
3	Depreciation expenses				376
	Accumulated depreciation-Equipment (376*1)					376
	(for depreciation expenses recognized)
	Interest expenses				460
	Interest payable (460*1)					460
	(for interest accrued)
4	Insurance expenses (12720*1/12)				1060
	Prepaid insurance					1060
	(for insurance expired recognized as expense)
5	Supplies expenses				1242
	Supplies account					1242
	(for supplies consumed during the period)