C4-3 Recording Transactions (Including Adjusting Journal Entries), Preparing Financial Statements and Closing Journal Entries, and Computing Net Profit Margin and Current Ratio ( Chapters 2, 3, and 4) LO 2-3, 3-3, 4-1, 4-2, 4-3. 4-4. 4-5, 4-6 Account Titles Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Software Accumulated Amortization Accounts Payable Notes Payable (short-term) Salaries and Wages Payable Interest Payable Income Taxes Payable Deferred Revenue Common Stock Retained Earnings Service Revenue Depreciation Expense Amortization Expense Salaries and Wages Expense Supplies Expense Interest Expense Income Tax Expense Totals Debit Credit $7 3 3 8 $ 1 5 S 0 0 0 0 0 0 5 0 0 0 0 15 4 $26 $26 Transactions during 2021 (summarized in thousands of dollars) follow: a. Borrowed $22 cash on July 1, 2021, signing a six-month note payable. b. Purchased equipment for $25 cash on July 2, 2021. c. Issued additional shares of common stock for $5 on July 3. d. Purchased software on July 4, $3 cash. e. Purchased supplies on July 5 on account for future use, $7. f. Recorded revenues on December 6 of $55, including $8 on credit and $47 received in cash. g. Recognized salaries and wages expense on December 7 of $30; paid in cash. h. Collected accounts receivable on December 8, $9. i. Paid accounts payable on December 9, $10. j. Received a $3 cash deposit on December 10 from a hospital for a contract to start January 5, 2022. Data for adjusting journal entries on December 31: k. Amortization for 2021, $1. 1. Supplies of $3 were counted on December 31, 2021. m. Depreciation for 2021, $4. n. Accrued interest of $1 on notes payable. o. Salaries and wages incurred but not yet paid or recorded, $3. p. Income tax expense for 2021 was $4 and will be paid in 2022. Required: 1. Set up T-accounts for the accounts on the trial balance and enter beginning balances. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you. 2. Record journal entries for transactions (a) through ()). 3. Post the journal entries from requirement 2 to T-accounts and prepare an unadjusted trial balance. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you using your answers to requirement 2. 4. Record the adjusting journal entries (k) through (p). 5. Post the adjusting entries from requirement 4 and prepare an adjusted trial balance. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you using your previous answers. 6. Prepare an income statement, statement of retained earnings, and balance sheet. 7. Prepare the closing journal entry. 8. Post the closing entry from requirement 7 and prepare a post-closing trial balance. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you using your previous answers. 9. How much net income did the physical therapy clinic generate during 2021? What was its net profit margin? Is the business financed primarily by liabilities or stockholders' equity? What is its current ratio