Accounting Cycle Problem

Bluemark Health Care Inc. is owned and operated by Dr. George Hancock, the sole stockholder.

Bluemark's January 1, 2017 trial balance appears below.

Part 1

Part 2: Ledger

Bluemark Health Care, Inc.

Trial Balance

January 1, 2017

Cash

Unearned Rent Revenue

Service Revenue

Supplies Expense

Account

Debit

Credit

40,000

0

Cash

40,000

Accounts Receivable

60,000

Prepaid Insurance

-

Supplies

2,000

Building

330,000

Accumulated Depreciation

40,000

Land

200,000

Accounts Receivable

Wages Payable

Rent Revenue

Insurance Expense

Accounts Payable

43,500

60,000

0

Unearned Rent Revenue

-

Wages Payable

-

Interest Payable

-

Notes Payable

200,000

Capital Stock

50,000

Retained Earnings

298,500

Prepaid Insurance

Interest Payable

Wages Expense

Depreciation Expense

Dividends

-

0

0

Income Summary

Service Revenue

-

Rent Revenue

-

Wages Expense

-

Supplies

Notes Payable

Utilities Expense

Utilities Expense

-

2,000

200,000

Rent Expense

-

Interest Expense

-

Miscellaneous Expense

Advertising Expense

-

Building

Capital Stock

Rent Expense

Supplies Expense

-

330,000

50,000

Insurance Expense

-

Depreciation Expense

-

632,000

632,000

Accumulated Deprec - Bldg

Retained Earnings

Interest Expense

40,000

298,500

Bluemark Health Care completed the following transactions during January 2017

Trans #/Date

Description

# 1 - Jan 1

Received $6,000 from Rivers Company as rent for the use of a vacant office in Bluemark

Health Care's building. Rivers paid rent six months in advance (hint: credit unearned rent revenue).

Land

Dividends

Miscellaneous Expense

#2 - Jan 1

Paid $9,000 for an insurance premium on a general business policy. This payment

200,000

was debited to Prepaid Insurance.

#3 - Jan 6

Purchased supplies of $5,000 on account.

#4 - Jan 9

Collected $28,000 for services provided to customers on account.

#5 - Jan 11

Paid creditors $21,000 on account.

Accounts Payable

Income Summary

Advertising Expense

#6 - Jan 18

The sole shareholder invested an additional $70,000 in the business in exchange for

43,500

capital stock.

#7 - Jan 20

Billed patients $164,000 for services provided on account.

#8 - Jan 25

Received $26,000 for services provided to customers who paid cash.

#9 - Jan 30

Paid cash for expenses as follows: wages, $51,000, utilities, $8,000, rent on medical

equipment, $6,800, miscellaneous, $400, and advertising, $4,300.

#10 - Jan 30

Paid dividends of $14,000 to stockholders (Dr. Hancock).

Part 3: Journal, adjust, & close entries

#11 - Jan 30

Received $102,000 cash from customers in payment of services billed on Jan 20.

Journal Entries:

January 31, 2017 Bluemark Health Care adjustment data appears below:

Adjust A

$1,500 of the prepaid insurance expired during January.

JE#

Accounts/Description

Debit

Credit

Adjust B

$3,000 of supplies were on hand on January 31. (hint: check the unadj supplies bal first).

1

Adjust C

January depreciation on building was $1,100.

Adjust D

$1,000 of unearned rent revenue was earned.

Adjust E

Wages owed employees but not paid was $8,000.

2

Adjust F

Services provided but not yet billed to patients was $10,000.

Adjust G

There was $2,100 in interest payable on 1/31/17 related to the $200,000 notes payable.

Requirements:

3

1

Under "Journal Entries" in the "journal, adjust & close entries" worksheet, prepare

journal entries for the 11 transactions in January 2017.

4

2

Post (enter) the journal entries from (1) to the Ledger (T-Accounts) in the "Ledger" worksheet.

(Beginning balances have already been entered in the Ledger accounts.)

5

3

Under "Adjusting Entries" in the "journal, adjust & close entries" worksheet, prepare the

adjusting entries A through G.

6

4

Post (enter) the adjusting entries from (3) to the Ledger (T-Accounts) in the "Ledger" worksheet.

5

Prepare the adjusted trial balance in the "adjusted and post trial balance" worksheet by

7

transferring the adjusted ending balances from the "Ledger" worksheet.

6

Prepare an income statement and retained earnings statement for January 2017 and a

8

January 31, 2017 balance sheet in the "financial statements" worksheet using the ending balances

from the adjusted trial balance.

9

7

Prepare closing entries at January 31, 2017 (in the "journal, adjust & close entries" worksheet) as follows:

(1) Close revenue to Income Summary Account

(2) Close expenses to Income Summary Account

(3) Close Income Summary Account to Retained Earnings

(4) Close Dividends to Retained Earnings

8

Post (enter) closing entries from (7) to the Ledger (T-Accounts) in the "Ledger" worksheet.

10

Then prepare a January 31, 2017 post-closing trial balance in the "adjusted and post trial balance" worksheet

by transferring the final balances from the "Ledger" worksheet.

(Note: there should be no income statement accounts appearing on the post-closing trial balance because

11

the income statement accounts should all have zero balances.)

Part 4: Adjusted and post trial balance

Bluemark Health Care, Inc.

Adjusting Entries:

Adjusted Trial Balance

January 31, 2017

Adjust

Accounts/Description

Debit

Credit

Account

Debit

Credit

A

B

Bluemark Health Care, Inc.

Post Closing Trial Balance

January 31, 2017

C

Account

Debit

Credit

Part 5: Financial statement

D

Bluemark Health Care, Inc.

Income Statement

Month Ended January 31, 2017

E

F

G

Bluemark Health Care, Inc.

Retained Earnings Statement

Closing Entries:

Month Ended January 31, 2017

Adjust

Accounts/Description

Debit

Credit

1

2

Bluemark Health Care, Inc.

Balance Sheet

January 31, 2017

3

4

Please show your work step by step. Thank you.