Question

Financial Statements SLO Health Care Inc. is owned and operated by Morgan Denby, the sole stockholder. 9 During January 2015, San Mateo Health Care entered into the following transactions: Jan. 1 Received $13,500 from Glenn Company as rent for the use of a vacant office in SLO Health Care's building, Glenn paid the rent nine months in advance 1 Paid $3,000 for a one-year general insurance business policy. 6 Purchased supplies of $900 on account. Collected $15,000 for services provided to customers on account. 11 Paid creditors $2,500 on account. 18 Invested an additional $5,000 in the business in exchange for common stock. 20 Billed patients $26,000 for services provided on account 25 Received $7,500 for services provided to customers who paid cash. 30 Paid expenses as follows: wages, $15,500 utilities, $4,250 rent on medical equipment, $2,650 interest, $100 and miscellaneous, $1,500. 30 Pald dividends of $4,000 to stockholder (Dr. Denby). Adjustment data for SLO Health Care Inc. for January are as follows: 1. Insurance expired, $450. 2. Supplies on hand on January 31, $600. 3. Depreciation on building, $1,150. 4. Unearned rent revenue earned, $1,500 5. Wages owed employees but not paid, 51,450. 6. Services provided but not billed to patients, $2,500 Presented in the integrated financial statement format are after adjustment balances for January Instructions: Prepare an income statement for January

Answer 1

Prepare journal entries as follows:

Date	Account Titles	Debit	Credit
Jan. 01	Cash	$13,500
	Unearned rent revenue		$13,500
Jan. 01	Prepaid Insurance	$3,000
	Cash		$3,000
Jan. 06	Supplies	$900
	Accounts payable		$900
Jan. 09	Cash	$16,000
	Accounts receivable		$16,000
Jan. 11	Accounts payable	$2,500
	Cash		$2,500
Jan. 18	Cash	$5,000
	Common stock		$5,000
Jan. 20	Accounts receivable	$26,000
	Service revenue		$26,000
Jan. 25	Cash	$7,500
	Service revenue		$7,500
Jan. 30	Wages Expense	$15,500
	Utilities Expense	$4,250
	Rent on medical equipment expense	$2,650
	Interest Expense	$100
	Miscellaneous Expense	$1,500
	Cash		$24,000
Jan. 30	Dividends	$4,000
	Cash		$4,000

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Prepare adjusting entries as follows:

Trn.	Account Titles	Debit	Credit
1)	Insurance Expense	$450
	Prepaid Insurance		$450
2)	Supplies Expense	$300
	Supplies [$900 - $600]		$300
3)	Depreciation expense	$1,150
	Accumulated depreciation		$1,150
4)	Unearned rent revenue	$1,500
	Rental revenue		$1,500
5)	Wages Expense	$1,450
	Wages payable		$1,450
6)	Accounts receivable	$2,500
	Service revenue		$2,500

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Income Statement
Service revenue [$7500 + $26000 + $2500]		$36,000
Operating expenses:
Wages Expense [$15500 + $1450]	$16,950
Utilities Expense	$4,250
Rent on medical equipment expense	$2,650
Interest Expense	$100
Miscellaneous Expense	$1,500
Insurance Expense	$450
Supplies Expense	$300
Depreciation expense	$1,150
Total operating expense		$27,350
Operating Income		$8,650
Other revenue:
Rental revenue		$1,500
Net Income		$10,150

Note: The above calculation as per data provided in the question.

For balance sheet Beginning balance required.

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