Izabela Jach opened a medical office under the name Izabela Jach, MD, on August 1, 2021. 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 September, $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 eff ects 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?