Question

Help for income, retained earnings, balance sheet, Net profit margin, and a current ratio

Drs. Glenn Feltham and David Ambrose began operations of their physical therapy clinic, called Northland Physical Therapy, on January 1, 2017. The annual reporting period ends December 31. The trial balance on January 1, 2018, was as follows (the amounts are rounded to thousands of dollars to simplify):

Account Titles	Debit			Credit
Cash	$	6
Accounts Receivable		2
Supplies		2
Equipment		9
Accumulated Depreciation				$	2
Software		7
Accumulated Amortization					2
Accounts Payable					4
Notes Payable (short-term)					0
Salaries and Wages Payable					0
Interest Payable					0
Income Taxes Payable					0
Deferred Revenue					0
Common Stock					16
Retained Earnings					2
Service Revenue					0
Depreciation Expense		0
Amortization Expense		0
Salaries and Wages Expense		0
Supplies Expense		0
Interest Expense		0
Income Tax Expense		0
Totals	$	26		$	26

Transactions during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $23 cash on July 1, 2018, signing a six-month note payable.
2. Purchased equipment for $26 cash on July 2, 2018.
3. Issued additional shares of common stock for $6 on July 3.
4. Purchased software on July 4, $2 cash.
5. Purchased supplies on July 5 on account for future use, $8.
6. Recorded revenues on December 6 of $57, including $9 on credit and $48 received in cash.
7. Recognized salaries and wages expense on December 7 of $31; paid in cash.
8. Collected accounts receivable on December 8, $8.
9. Paid accounts payable on December 9, $9.
10. Received a $2 cash deposit on December 10 from a hospital for a contract to start January 5, 2019.

Data for adjusting journal entries on December 31:

11. Amortization for 2018, $2.
12. Supplies of $2 were counted on December 31, 2018.
13. Depreciation for 2018, $3.
14. Accrued interest of $1 on notes payable.
15. Salaries and wages incurred but not yet paid or recorded, $4.
16. Income tax expense for 2018 was $3 and will be paid in 2019.

1. 6-a. Prepare an income statement.

2. 6-b. Prepare the statement of retained earnings.

3. 6-c. Prepare the balance sheet.

ALSO: How much net income did the physical therapy clinic generate during 2018? What was its net profit margin? (Enter "Net Income" in thousands of dollars. Round "Net Profit Margin" to 1 decimal place.)

ALSO: What is its current ratio? (Enter your answers in thousands of dollars.) For numerator and the denominator?

Help for income, retained earnings, balance sheet, Net profit margin, and a current ratio

Answer 1

Account Titles Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Software Accumulated Amortization Accounts Payable Notes Payable (short-term) Salaries and Wages Payable Interest Payable Income Taxes Payable Deferred Revenue Common Stock Retained Earnings Service Revenue Depreciation Expense Amortization Expense Salaries and Wages Expense $ Supplies Expense Interest Expensse Income Tax Expense Total Debit Credit 25 6+23-26+6-2+48-31+8-9+2 $ 3 2+9-8 2 2+8-8 $35 9+26 52+3 9 7+2 42+2 34+8-9 $ $ 23 4 $ 1 3 2 $ 22 16+6 $ 2 57 3 2 35 31+4 $ 8 $ 1 $126 126 EA EA EAEAEA EAEAGA EA EA Ov EA EA EA EA EAEAEA

Income Statement Balance Sheet Service Revenue $57 Assets Liabilities & Stockholder's Fund Current Liabilities Expenses: Depreciation Expense Amortization Expense Salaries and Wages Expense Supplies Expense Interest Expense Income Tax Expense Total Expenses Net Income Current Assets Accounts Payable Notes Payable (short-term) Salaries and Wages Payable S 4 Interest Payable Income Taxes Payable 3 Cash $25 3 Accounts Receivable 2 3 $23 Supplies 35 2 8 1 1 3 Deferred Revenue 30 Total Current Liabilities Stockholder's Fund 30 Common Stock Retained Earnings 5 Total Stockholder's Equity 3 2 Total Current Assets $52 36 Equipment Less:Accumulated Depreciation$-5 Software Less: Amortisation Total Assets $ 5 $35 $22 Retained Earnings 9 7 Opening of Retained Earnings Add: Net Income $-4$ $ 2 29 5 65 $ 65 Less; Dividend Closing of Retained earnings 7