Question

Laura Hall, D.D.S., opened a dental practice on January 1, 2020. During the first month of operations, the following transactions occurred. 1. 2. 3. Performed services for patients who had dental plan insurance. At January 31, $726 of such services was performed but not yet billed to the insurance companies. Utility expenses incurred but not paid prior to January 31 totaled $563. Purchased dental equipment on January 1 for $75,000, paying $22.000 in cash and signing a $53,000, 3-year note payable. (a) The equipment depreciates $426 per month. (b) Interest is $470 per month Purchased a one-year malpractice insurance policy on January 1 for $10.920. Purchased $1,611 of dental supplies. On January 31, determined that $540 of supplies were on hand. 5. 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry for the account titles and enter for the amounts.) No. Account Titles and Explanation Debit Credit 1. 2.

Answer 1

Preparation of the Adjusting Entries on January 31: Journal Entries Date Account Title and Explaination Post. Ref. Debit $ Credit $ 1 726.00 726.00 Jan.31 Accounts Receivable Service Revenue (To record adjusting entry for service provided but not yet billed) 2 Jan.31 $ 563.00 $ 563.00 Utilities Expense Utilities Payable (To record adjusting entry for accrued utilities expense) 426.00 426.00 3 Jan.31 Depreciation Expense Accumulated Depreciation - Equipment (To record adjusting entry for Depreciation Expense) $ 910.00 910.00 4. Jan.31 Insurance Expense ($10920/12) Prepaid Insurance (To record adjusting entry for expired portion of prepaid insurance) 5 Jan.31 Supplies Expense ($1611-$540) Supplies (To record adjusting entry for consumption of Supplies) $ 1,071.00 1,071.00

Preparation of Multiple-step Income Statement: $ 1,183,150.00 (622,850.00) 560,300.00 Sales Revenue $ 1,381,850.00 Less: Sales Returns and Allowances $ (151,850.00) Less: Sales Discounts $ (46,850.00) Net Sales $ Less: Cost of Goods Sold $ Gross Profit $ Less:Operating Expenses: Selling Expenses $ 195,850.00 Administrative and General Expenses $ 98,850.00 Total Operating Expenses $ Net Operating Income Less: Non Operating Expenses and Losses: Interest Expense $ 61,850.00 Loss from Earthquake damage $ 151,850.00 Total Non Operating Expenses and Losses $ Income Before Taxes $ Less: Income Tax Expense (20% x $51900) $ Net Income $ (294,700.00) 265,600.00 (213,700.00) 51,900.00 (10,380.00) 41,520.00