1 Paid $4,200 for an insurance premium on a general business policy — Oasis Health Care Inc owned and operated George Hancock the sole stockholder

Oasis Health Care Inc. is owned and operated by Dr. George Hancock, the sole stockholder. During January 2013, Oasis Health Care entered into the following transactions:

Jan. 1 Received $15,000 from Rivers Company as rent for the use of a vacant office in Oasis Health Care’s building. Rivers paid the rent six months in advance.

1 Paid $4,200 for an insurance premium on a general business policy.

6 Purchased supplies of $1,800 on account.

9 Collected $27,500 for services provided to customers on account.

11 Paid creditors $3,000 on account.

18 Invested an additional $25,000 in the business in exchange for capital stock.

20 Billed patients $62,000 for services provided on account.

25 Received $12,900 for services provided to customers who paid cash.

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30 Paid expenses as follows: wages, $24,000; utilities, $6,000; rent on medical equipment, $5,000; interest, $200; and miscellaneous, $2,500.

30 Paid dividends of $15,000 to stockholders (Dr. Hancock).

Instruction

Analyze and record the January transactions for Oasis Health Care Inc., using the integrated financial statement framework. Record each transaction by date, and show the balance for each item after each transaction. The January 1, 2013, balances for the balance sheet are shown below.

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SOLUTION:

Solution is on next page

	Statement of	Statement of	Statement of	Statement of	Statement of	Statement of																	Balance	Balance	Balance
	Statement of	Statement of	Statement of	Statement of	Statement of	Statement of																	Balance	Balance	Balance
				Cash Flows	Cash Flows	Cash Flows								Assets	Assets	Assets	Assets	Assets	Assets
											Accts.			Prepaid									Acc.	Acc.
								Cash	+	+	Rec.	+	+	Insurance	+	+	Supplies	+	+	Building	–	–	Depr.	Depr.	+
						Balances, Jan. 1		20,000			34,500			700			1,000			150,000			–11,200	–11,200
	Jan. 1.	Jan. 1.	Jan. 1.			Received rent rev.		15,000
						Balances		35,000			34,500			700			1,000			150,000			–11,200	–11,200
	Jan. 1.	Jan. 1.	Jan. 1.			Paid ins.		–4,200						4,200
						Balances		30,800			34,500			4,900			1,000			150,000			–11,200	–11,200
	Jan. 6.	Jan. 6.	Jan. 6.			Purchased supplies											1,800
						Balances		30,800			34,500			4,900			2,800			150,000			–11,200	–11,200
	Jan. 9.	Jan. 9.	Jan. 9.			Collected cash		27,500			–27,500
						Balances		58,300			7,000			4,900			2,800			150,000			–11,200	–11,200
	Jan. 11.	Jan. 11.	Jan. 11.			Paid creditors		–3,000
						Balances		55,300			7,000			4,900			2,800			150,000			–11,200	–11,200
	Jan. 18.	Jan. 18.	Jan. 18.			Issued capital stock		25,000
						Balances		80,300			7,000			4,900			2,800			150,000			–11,200	–11,200
	Jan. 20.	Jan. 20.	Jan. 20.			Billed patients					62,000
						Balances		80,300			69,000			4,900			2,800			150,000			–11,200	–11,200
	Jan. 25.	Jan. 25.	Jan. 25.			Cash fees		12,900
						Balances		93,200			69,000			4,900			2,800			150,000			–11,200	–11,200
	Jan. 30.	Jan. 30.	Jan. 30.			Paid expenses		–37,700
						Balances		55,500			69,000			4,900			2,800			150,000			–11,200	–11,200
	Jan. 30.	Jan. 30.	Jan. 30.			Paid dividends		–15,000
			Balances	Balances	Balances	40,500	40,500	69,000	69,000	69,000	4,900	4,900	4,900	2,800	2,800	2,800	150,000	150,000	150,000	–11,200	–11,200
	Statement of Cash Flows	Statement of Cash Flows	Statement of Cash Flows	Statement of Cash Flows	Statement of Cash Flows	Statement of Cash Flows	Statement of Cash Flows
Jan. 1.			Operating	Operating	Operating	15,000	15,000
Jan. 1.			Operating	Operating	Operating	–4,200	–4,200
Jan. 9.			Operating	Operating	Operating	27,500	27,500
Jan. 11. Operating	Jan. 11. Operating	Jan. 11. Operating	Jan. 11. Operating	Jan. 11. Operating	Jan. 11. Operating	–3,000	–3,000
Jan. 18.	Jan. 18.	Jan. 18.	Financing	Financing	Financing	25,000	25,000
Jan. 25.	Jan. 25.	Jan. 25.	Operating	Operating	Operating	12,900	12,900
Jan. 30.	Jan. 30.	Jan. 30.	Operating	Operating	Operating	–37,700	–37,700
Jan. 30.	Jan. 30.	Jan. 30.	Financing	Financing	Financing	–15,000	–15,000
Net increase in cash, Jan. 1	Net increase in cash, Jan. 1	Net increase in cash, Jan. 1	Net increase in cash, Jan. 1	Net increase in cash, Jan. 1	Net increase in cash, Jan. 1	20,500	20,500
Beginning cash balance	Beginning cash balance	Beginning cash balance	Beginning cash balance	Beginning cash balance	Beginning cash balance	20,000	20,000
Ending cash balance, Jan. 31	Ending cash balance, Jan. 31	Ending cash balance, Jan. 31	Ending cash balance, Jan. 31	Ending cash balance, Jan. 31	Ending cash balance, Jan. 31	40,500	40,500

Sheet	Sheet
Sheet	Sheet
		=			Liabilities	Liabilities	Liabilities			+	Stockholders’ Equity	Stockholders’ Equity	Stockholders’ Equity
			Accts.		Unearned		Wages		Notes		Capital		Retained
+	Land	=	Payable	+	Revenue	+	Payable	+	Payable	+	Stock	+	Earnings
	120,000		7,500		0		0		30,000		50,000		227,500
					15,000
	120,000		7,500		15,000		0		30,000		50,000		227,500
	120,000		7,500		15,000		0		30,000		50,000		227,500
			1,800
	120,000		9,300		15,000		0		30,000		50,000		227,500
	120,000		9,300		15,000		0		30,000		50,000		227,500
			–3,000
	120,000		6,300		15,000		0		30,000		50,000		227,500
											25,000
	120,000		6,300		15,000		0		30,000		75,000		227,500
													62,000
	120,000		6,300		15,000		0		30,000		75,000		289,500
													12,900
	120,000		6,300		15,000		0		30,000		75,000		302,400
													–37,700
	120,000		6,300		15,000		0		30,000		75,000		264,700
													–15,000
	120,000		6,300		15,000		0		30,000		75,000		249,700
									Income Statement	Income Statement	Income Statement	Income Statement	Income Statement
									Jan. 20. Fees earned	Jan. 20. Fees earned	Jan. 20. Fees earned	Jan. 20. Fees earned	62,000
									Jan. 25. Fees earned	Jan. 25. Fees earned	Jan. 25. Fees earned	Jan. 25. Fees earned	12,900
									Jan. 30. Wages exp.	Jan. 30. Wages exp.	Jan. 30. Wages exp.	Jan. 30. Wages exp.	–24,000
									Utilities exp.	Utilities exp.	Utilities exp.	Utilities exp.	–6,000
									Rent exp.	Rent exp.	Rent exp.	Rent exp.	–5,000
									Interest exp.	Interest exp.	Interest exp.	Interest exp.	–200
									Misc. exp.	Misc. exp.	Misc. exp.	Misc. exp.	–2,500