Izabela Jach opened a medical office under the name Izabela Jach, MD, on August 1, 2017. On

Question:

Izabela Jach opened a medical office under the name Izabela Jach, MD, on August 1, 2017. On August 31, the balance sheet showed Cash $3,000; Accounts Receivable $1,500; Supplies $600; Equipment $7,500; Accounts Payable $5,500; Note Payable $3,000; and I. Jach, Capital, $4,100. During September, the following transactions occurred:

Sept. 4 Collected $800 of accounts receivable.

5 Provided services of $10,500, of which $7,700 was collected from patients and the remainder was on account.

7 Paid $2,900 on accounts payable.

12 Purchased additional equipment for $2,300, paying $800 cash and leaving the balance on account.

15 Paid salaries, $2,800; rent for August, $1,900; and advertising expenses, $275.

18 Collected the balance of the accounts receivable from August 31.

20 Withdrew $1,000 for personal use.

26 Borrowed $3,000 from the Bank of Montreal on a note payable.

28 Signed a contract to provide medical services, not covered under the government health plan, to employees of CRS Corp. in October for $5,700. CRS Corp. will pay the amount owing after the medical services have been provided.

29 Received the telephone bill for September, $325.

30 Billed the government $10,000 for services provided to patients in September.

Instructions

(a) Beginning with the August 31 balances, prepare a tabular analysis of the effects of the September transactions on the accounting equation.

(b) Prepare an income statement and statement of owner's equity for September, and a balance sheet at September 30.

TAKING IT FURTHER

What are the differences between purchasing an item on account and signing a note payable for the amount owing?

Accounts Payable
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Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...