T Accounts, Debits and Credits, 2 Trial Balance, and ...
嚜燜 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每.
6. Prepare a statement of owner*s equity for month ending September 30, 20每.
Copyright ? Houghton Mifflin Company. All rights reserved.
1
7. Prepare a balance sheet as of September 30, 20每.
Copyright ? Houghton Mifflin Company. All rights reserved.
2
T Accounts, Debits and Credits, Trial Balance, and Financial Statements
=
Assets
Liabilities
每
+
Debit
Credit
每
Credit
+
Debit
Cash
Bal.
(g)
Bal.
+
每
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
每
+
Bal. 1,590
1,590 (c)
649
116
(h)
2,355
765
Bal.
CHAPTER 2
Owner's Equity
每
+
Debit
Credit
C. Russo, Capital
每
+
Bal. 42,076
C. Russo, Drawing
每
+
Bal. 40,000
5,000
(j)
Bal. 45,000
+
Prepaid Insurance
+
每
980
Bal.
1,800
(b)
2,780
Bal.
Bal.
(c)
Bal.
Furniture and
Equipment
+
每
5,963
849
6,812
Bal.
Automobile
+
每
20,650
ACCOUNT NAME
Copyright ? Houghton Mifflin Company. All rights reserved.
DEBIT
Expenses
+
每
Debit
Credit
Salary Expense
+
每
Bal. 14,380
1,797
(e)
Bal. 16,177
Rent Expense
+
每
Bal. 10,320
1,290
(a)
Bal. 11,610
Dr. Christy Russo
Trial Balance
September 30, 20每
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
每
+
Bal. 72,118
9,015
(d)
Bal. 81,133
1,730
Accounts Receivable
+
每
Bal. 18,120 (g) 11,060
9,015
(d)
27,135
Bal. 16,075
每
Revenue
每
Debit
CREDIT
1,730.00
16,075.00
2,780.00
20,650.00
6,812.00
765.00
42,076.00
Automobile Expense
+
每
Bal.
859
116
(h)
975
Bal.
Utilities Expense
+
每
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
+
每
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〞
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〞
$42,076.00
C. Russo, Capital, September 1, 20〞
Net Income for September
Less Withdrawals for September
Increase in Capital
C. Russo, Capital, September 30, 20 〞
$50,206.00
45,000.00
5,206.00
$47,282.00
Dr. Christy Russo
Balance Sheet
September 30, 20〞
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
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