Using the accounting equation to analyze transactions [10-20 min]
Caren Smith opened a medical practice. During July, the first month of operation, the business, titled Caren Smith, M.D., P.C. (Professional Corporation), experienced the following events:
Jul 6 | Smith invested $55,000 in the business by opening a bank account in the name of C. Smith, M.D., P.C. The corporation issued common stock to Smith. |
9 | Paid $46,000 cash for land. |
12 | Purchased medical supplies for $1,800 on account. |
15 | Officially opened for business. |
15-31 | During the rest of the month, Smith treated patients and earned service revenue of $8,000, receiving cash. |
29 | Paid cash expenses: employees’ salaries, $1,600; office rent, $900; utilities, $100. |
30 | Returned supplies purchased on the 12th for the cost of those supplies, $700. |
31 | Paid $1,100 on account. |
Requirement
1. Analyze the effects of these events on the accounting equation of the medical practice of Caren Smith, M.D., P.C. Use a format similar to that of Exhibit, with headings for Cash, Medical supplies, Land, Accounts payable, Common stock, and Retained earnings.
Analysis of Transactions, Smart Touch Learning, Inc.
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