Accrual Accounting In mid-August Dr. Saunders asked an accountant to evaluate her financial statements. The accountant learned that DSAC had billed clients an additional $6,500 for care delivered in July but did not receive payments until August. DSAC also purchased and used an additional $500 of drugs and medical supplies in July but did not pay for them until August. The accountant estimated the instruments, furniture, and equipment would last about five years and decided to depreciate those assets over a 60-month period using straight-line depreciation with no salvage value.

Required

1. Record the additional activity. Prepare a revised income statement for July 2009 and a revised balance sheet as of July 31, 2009.

2. Reevaluate whether DSAC was successful during its first month of operation.