Question

Izabela Cullumber opened a medical office under the name Izabela Cullumber, MD, on August 1, 2021. On August 31, the balance sheet showed Cash $2,800; Accounts Receivable $2,500; Supplies $503; Equipment $7,000: Accounts Payable $4,080; Note Payable $2,800; and I. Cullumber, Capital, $5,923. During September, the following transactions occurred: Sept. 4 Collected $900 of accounts receivable. 5 Provided services of $10,869, of which $7,000 was collected from patients and the remainder was on account. 7 Paid $1,700 on accounts payable. 12 Purchased additional equipment for $2.469.paying $879 cash and leaving the balance on account. 15 Paid salaries, $4,100; rent for September, $2,026; and advertising expenses. $195. 18 Collected the balance of the accounts receivable from August 31. 20 Withdrew $600 for personal use. 26 Borrowed $2,800 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 $4,700. CRS Corp. will pay the amount owing after the medical services have been provided. 29 Received the telephone bill for September, $355. 30 Billed the government $11,000 for services provided to patients in September. Beginning with the August 31 balances, prepare a tabular analysis of the effects of the September transactions on the accounting equation. (If a transaction causes a decrease in Assets, Liabilities or Owner's Equity place a negative sign for parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced. See Illustration 1-13 for example.) Assets Equipment Accounts Receivable Supplies Cash Bal. $

Answer 1

1.

	Assets								Liabilities			+	Owner's Capital
	Cash	+	Accounts Receivable	+	Supplies	+	Equipment	=	Accounts payable	+	Note payable	+	I.C Capital	+	Revenues	-	Expenses	-	Drawings
Aug. 31, Bal.	$2,800		$2,500		$503		$7,000		$4,080		$2,800		$5,923
Sept.
4	$900		($900)
5	$7,000		$3,869												$10,869
7	($1,700)								($1,700)
12	($879)						$2,469		$1,590
15	($6,321)																$6,321
18	$2,500		($2,500)
20	($600)																		$600
26	$2,800										$2,800
29									$375								$375
30			$11,000												$11,000
Total	$6,500	+	$13,969	+	$503	+	$9,469	=	$4,345	+	$5,600	+	$5,923	+	$21,869	-	$6,696	-	$600

Note: September 28 transaction will be completed in october. therefore no accounting required.

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Prepare income statement as follows:

IC, MD
Income Statement
Revenue:
Patients revenue ($10,869 + $11,000)		$21,869
Less: Operating expense:
Salaries expense	$6,321
Telephone expense	$375	$6,696
Net Income		$15,173

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Prepare statement of owner's capital

IC, MD
Statement of owner's equity
Beginning balance	$5,923
Add: Income	$15,173
Less: drawings	($600)
Ending balance	$20,496

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Prepare Balance Sheet as follows:

IC,MD
Balance Sheet
Assets:
Cash	$6,500
Accounts receivable	$13,969
Supplies	$503
Equipment	$9,469
Total Assets	$30,441
Liabilities:
Accounts payable	$4,345
Notes payable	$5,600
Owner's equity	$20,496
Total Liabilities & Owner's equity	$30,441