T Accounts, Debits and Credits, 2 Trial Balance, and ...

T Accounts, Debits and Credits,

Trial Balance, and Financial

Statements

2

DEMONSTRATION PROBLEM

Dr. Christy Russo maintains an office for the practice of veterinary medicine. The account balances as of September 1 are given below. All are normal balances.

Assets

Cash

Accounts Receivable

Prepaid Insurance

Automobile

Furniture and Equipment

Liabilities

Accounts Payable

Owner's Equity

C. Russo, Capital

C. Russo, Drawing

$ 2,459

18,120

980

20,650

5,963

1,590

Revenue

Professional Fees

Expenses

Salary Expense

Rent Expense

Automobile Expense

Utilities Expense

Supplies Expense

$72,118

14,380

10,320

859

1,213

840

42,076

40,000

The following transactions occurred during September of this year.

a. Paid rent for the month, $1,290.

b. Paid $1,800 for one year¡¯s coverage of liability insurance.

c. Bought medical equipment on account from Bennett Surgical Supply, $849, paying $200

down with the balance due in thirty days.

d. Billed patients for services performed, $9,015.

e. Paid employee salaries, $1,797.

f. Received and paid gas and electric bill, $112.

g. Received cash from patients previously billed, $11,060.

h. Received bill for gasoline for car, used only in the professional practice, from Garza Fuel

Company, $116.

i. Paid creditors on account, $1,590.

j. Dr. Russo withdrew cash for personal use, $5,000.

Instructions

1. Correctly place plus and minus signs under each T account and label the sides of the T accounts as either debit or credit in the fundamental accounting equation. Record the account

balances as of September 1.

2. Record the September transactions in the T accounts. Key each transaction to the letter

that identifies the transaction.

3. Foot the columns.

4. Prepare a trial balance dated September 30.

5. Prepare an income statement for month ending September 30, 20¨C.

6. Prepare a statement of owner¡¯s equity for month ending September 30, 20¨C.

Copyright ? Houghton Mifflin Company. All rights reserved.

1

7. Prepare a balance sheet as of September 30, 20¨C.

Copyright ? Houghton Mifflin Company. All rights reserved.

2

T Accounts, Debits and Credits, Trial Balance, and Financial Statements

=

Assets

Liabilities

¨C

+

Debit

Credit

¨C

Credit

+

Debit

Cash

Bal.

(g)

Bal.

+

¨C

2,459 (a)

11,060 (b)

13,519 (c)

(e)

(f)

(i)

(j)

1,290

1,800

200

1,797

112

1,590

5,000

11,789

(i)

+

Accounts Payable

¨C

+

Bal. 1,590

1,590 (c)

649

116

(h)

2,355

765

Bal.

CHAPTER 2

Owner's Equity

¨C

+

Debit

Credit

C. Russo, Capital

¨C

+

Bal. 42,076

C. Russo, Drawing

¨C

+

Bal. 40,000

5,000

(j)

Bal. 45,000

+

Prepaid Insurance

+

¨C

980

Bal.

1,800

(b)

2,780

Bal.

Bal.

(c)

Bal.

Furniture and

Equipment

+

¨C

5,963

849

6,812

Bal.

Automobile

+

¨C

20,650

ACCOUNT NAME

Copyright ? Houghton Mifflin Company. All rights reserved.

DEBIT

Expenses

+

¨C

Debit

Credit

Salary Expense

+

¨C

Bal. 14,380

1,797

(e)

Bal. 16,177

Rent Expense

+

¨C

Bal. 10,320

1,290

(a)

Bal. 11,610

Dr. Christy Russo

Trial Balance

September 30, 20¨C

Cash

Accounts Receivable

Prepaid Insurance

Automobile

Furniture and Equipment

Accounts Payable

C. Russo, Capital

C. Russo, Drawing

Professional Fees

Salary Expense

Rent Expense

Automobile Expense

Utilities Expense

Supplies Expense

+

Credit

Professional Fees

¨C

+

Bal. 72,118

9,015

(d)

Bal. 81,133

1,730

Accounts Receivable

+

¨C

Bal. 18,120 (g) 11,060

9,015

(d)

27,135

Bal. 16,075

¨C

Revenue

¨C

Debit

CREDIT

1,730.00

16,075.00

2,780.00

20,650.00

6,812.00

765.00

42,076.00

Automobile Expense

+

¨C

Bal.

859

116

(h)

975

Bal.

Utilities Expense

+

¨C

1,213

Bal.

112

(f)

1,325

Bal.

45,000.00

81,133.00

16,177.00

11,610.00

975.00

1,325.00

840.00

123,974.00

Supplies Expense

+

¨C

840

Bal.

123,974.00

3

CHAPTER 2

T Accounts, Debits and Credits, Trial Balance, and Financial Statements

Dr. Christy Russo

Income Statement

For the Month Ending September 30, 20¡ª

Revenue:

Professional Fees

Expenses:

Salary Expense

Rent Expense

Automobile Expense

Utilities Expense

Supplies Expense

Total Expenses

Net Income

$81,133.00

$16,177.00

11,610.00

975.00

1,325.00

840.00

30,927.00

$50,206.00

Dr. Christy Russo

Statement of Owner's Equity

For the Month Ending September 30, 20¡ª

$42,076.00

C. Russo, Capital, September 1, 20¡ª

Net Income for September

Less Withdrawals for September

Increase in Capital

C. Russo, Capital, September 30, 20 ¡ª

$50,206.00

45,000.00

5,206.00

$47,282.00

Dr. Christy Russo

Balance Sheet

September 30, 20¡ª

Assets

$ 1,730.00

16,075.00

2,780.00

20,650.00

6,812.00

Cash

Accounts Receivable

Prepaid Insurance

Automobile

Furniture and Equipment

$48,047.00

Liabilities

$

Accounts Payable

765.00

Owner's Equity

C. Russo, Capital

Copyright ? Houghton Mifflin Company. All rights reserved.

47,282.00

$48,047.00

4

T Accounts, Debits and Credits, Trial Balance, and Financial Statements

Copyright ? Houghton Mifflin Company. All rights reserved.

CHAPTER 2

5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download