Izabela Jach opened a medical office under the name Izabela Jach, MD, on August 1, 2017. On August 31, the balance sheet showed Cash $3,000; Accounts Receivable $1,500; Supplies $600; Equipment $7,500; Accounts Payable $5,500; Note Payable $3,000; and I. Jach, Capital, $4,100. During September, the following transactions occurred:
Sept. 4 Collected $800 of accounts receivable.
5 Provided services of $10,500, of which $7,700 was collected from patients and the remainder was on account.
7 Paid $2,900 on accounts payable.
12 Purchased additional equipment for $2,300, paying $800 cash and leaving the balance on account.
15 Paid salaries, $2,800; rent for August, $1,900; and advertising expenses, $275.
18 Collected the balance of the accounts receivable from August 31.
20 Withdrew $1,000 for personal use.
26 Borrowed $3,000 from the Bank of Montreal on a note payable.
28 Signed a contract to provide medical services, not covered under the government health plan, to employees of CRS Corp. in October for $5,700. CRS Corp. will pay the amount owing after the medical services have been provided.
29 Received the telephone bill for September, $325.
30 Billed the government $10,000 for services provided to patients in September.
Instructions
(a) Beginning with the August 31 balances, prepare a tabular analysis of the effects of the September transactions on the accounting equation.
(b) Prepare an income statement and statement of owner’s equity for September, and a balance sheet at September 30.
TAKING IT FURTHER
What are the differences between purchasing an item on account and signing a note payable for the amount owing?
SOLUTION
(a) Izabela Jach, MD
| Cash | + | Accounts Receivable | + | Sup-plies | + | Equip-ment | = | Accounts Payable | + | Notes Payable | + | I. Jach, Capital | – | I. Jach, Drawings | + | Revenues | – | Expenses | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Bal Sept. 4 5 7 12 15 15 15 18 20 26 29 30 | $3,000 +800 +7,700 −2,900 −800 –2,800 –1,900 –275 +700 −1,000 +3,000 00000 $5,525 | + + | $1,500 −800 +2,800 –700 +10,000 $12,800 | + + | $600 0000 $600 | + + | $7,500 +2,300 00000 $9,800 | = = | $5,500 -2,900 +1,500 +325 00000 $4,425 | + | $3,000 +3,000 00000 $6,000 | + + | $4,100 000 00 $4,100 | – | –$1,000 000__0 $1,000 | + | +$10,500 +10,000 $20,500 | – | –$2,800 –1,900 –275 –325 _ $5,300 |
| $28,725 = $28,725 |
The September 28 transaction is not recorded, because the work will not commence until October.
(b)
IZABELA JACK, MD
Income Statement
Month Ended September 30, 2017
Revenues
Service revenue $20,500
Expenses
Advertising expense $ 275
Rent expense 1,900
Unlock the complete assignment
You are viewing the free preview. Purchase this assignment once to reveal the complete resource.
Secure checkout is completed by Stripe.