Question

Listed below are the transactions of Morgan Kawabata, D.D.S., for the month of September. Sept. 1 Kawabata begins practice as a dentist and invests $21,560 cash. 2 Purchases dental equipment on account from Green Jacket Co. for $17,520. 4 Pays rent for office space, $865 for the month. 4 Employs a receptionist, Michael Bradley. 5 Purchases dental supplies for cash, $1,012. 8 Receives cash of $1,770 from patients for services performed. 10 Pays miscellaneous office expenses, $500. 14 Bills patients $6,540 for services performed. 18 Pays Green Jacket Co. on account, $4,330. 19 Withdraws $3,450 cash from the business for personal use. 20 Receives $1,040 from patients on account. 25 Bills patients $2,200 for services performed. 30 Pays the following expenses in cash: Salaries and wages $3,330; miscellaneous office expenses $93. (Record each separately.) 30 Dental supplies used during September, $390. Record depreciation using a 5-year life on the equipment, the straight-line method, and no salvage value.

Enter the transactions shown above in appropriate general ledger accounts (use T-accounts). Do not use a drawing account. (Post entries in the order displayed in the problem statement.)

Prepare a trial balance.

Prepare an income statement. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Prepare a statement of owner’s equity. (List items that increase owner's equity first.)

Prepare an unclassified balance sheet. (List assets in order of liquidity.)

Answer 1

Morgan Kawabata, D.D.S. Journal entries Date Account 1-Sep Cash Owners Capital Credit Calculation Debit $ 21,560 $ 21,560 $ 17,520 2-Sep Equipment Accounts Payable $ 17,520 $ 865 4-Sep Rent expense Cash $ 865 4-Sep No entry $ 1,012 5-Sep Supplies Cash $ 1,012 $ 1,770 8-Sep Cash Service Revenue $ 1,770 $ 500 10-Sep Office expense Cash $ 500 $ 6,540 14-Sep Accounts Receivable Service Revenue $ 6,540 $ 4,330 18-Sep Accounts Payable Cash $ 4,330 $ 3,450 19-Sep Owners Capital Cash $ 3,450 $ 1,040 20-Sep Cash Accounts Receivable $ 1,040 $ 2,200 25-Sep Accounts Receivable Service Revenue $ 2,200 30-Sep Salaries and Wages expense Office expense Cash $ $ 3,330 93 $ 3,423 $ 390 30-Sep Supplies expense Supplies $ 390 $ 292 =17,520/5*1/12 $ 292 30-Sep Depreciation expense Accumulated Depreciation-Equipment Closing entries 30-Sep Service Revenue Income Summary $ 10,510 $ 10,510 $ 5,470 30-Sep Income Summary Rent expense Office expense Salaries and Wages expense Supplies expense Depreciation expense $ $ $ $ $ 865 593 3,330 390 292 $ 5,040 30-Sep Income Summary Owners Capital $ 5,040

Credit Morgan Kawabata, D.D.S. T Accounts Date Debit Date Credit Cash 1-Sep $ 21,560 4-Sep $ 865 8-Sep $ 1,770 5-Sep $ 1,012 20-Sep $ 1,040 10-Sep $ 500 18-Sep $ 4,330 19-Sep $ 3,450 30-Sep $ 3,423 Date Debit Date Credit Accounts Receivable 14-Sep $ 6,540 20-Sep $ 1,040 25-Sep $ 2,200 Date Debit Date Credit Supplies 5-Sep $ 1,012 30-Sep $ 390 Date Debit Date Equipment 2-Sep $ 17,520 Bal. Bal. $ 10,790 Accumulated Depreciation-Equipment 30-Sep $ 292 Bal. $ 7,700 Accounts Payable 1 8-Sep $ 4,330 2-Sep $ 17,520 $ 622 Owners Capital 19-Sep $ 3,450 1-Sep $ 21,560 30-Sep $ 5,040 Bal. $ 17,520 Income Summary 30-Sep $ 5,470 30-Sep $ 10,510 30-Sep $ 5,040 $ 13,190 Bal. $ 292 Service Revenue 8-Sep $ 1,770 14-Sep $ 6,540 30-Sep $ 10,510 25-Sep $ 2,200 Bal. Rent expense 4-Sep $ 865 Bal. $ 23,150 Office expenses 10-Sep $ 500 30-Sep $ 93 30-Sep $ 593 Bal. $ Salaries and Wages expense 30-Sep $ 3,330 30-Sep $ 865 30-Sep $ 3,330 - Bal. Bal. Bal. $ Supplies expense 30-Sep $ 390 30-Sep $ Bal. Bal. $ - Depreciation expense 30-Sep $ 292 30-Sep $ 390 292 Bal. $ . $ .

Morgan Kawabata, D.D.S. Account Names Cash Accounts Receivable Supplies Equipment Accumulated Depreciation-Equipment Accounts Payable Owners Capital Income Summary Service Revenue Rent expense Office expense Salaries and Wages expense Supplies expense Depreciation expense Totals Trial Balance Debit Credit 10,790 7,700 622 17,520 292 13,190 18,110 10,510 865 593 3,330 390 292 42,102 42,102

10,510 Morgan Kawabata, D.D.S. Income Statement For the Month Ended Sep 30 Service Revenue Expenses Rent expense Office expense Salaries and Wages expense Supplies expense Depreciation expense Total Expenses Net Income 865 593 3,330 390 292 5,470 5,040 Statement of Owners Equity For the Month Ended Sep 30 Owners Equity, Sep 1 Add: Net Income Less: Drawing Owners Equity, Sep 30 21,560 5,040 (3,450) 23,150

Morgan Kawabata, D.D.S. Balance Sheet As of Sep 30 Assets Cash Accounts Receivable Supplies Equipment Accumulated Depreciation-Equipment Equipment, Net Total Assets 10,790 7,700 622 17,520 (292) 17,228 36,340 Liabilities & Owners Equity Liabilities Accounts Payable 13,190 Owners Equity Owners Capital Total Liabilities & Owners Equity 23,150 36,340