Chapter 3 Accrual Problems Oasis Health Care toc. is owned and operated by Dr. George Hancock, the During Javuary 20Y6, Oasis Health Care Accrual basis accounting P3-1 Health Care entered into the following t Osis Health Care's building. Rivers paid the rent six months in Paid $4,200 for an insurance premiun on a general business polis a Ins Jan 1 Received 315,000 from Rivers Company as rent for the use 9 Collected $27,500 for services provided to customers on accr 11 Paid creditors 53,000 on account 18 Invested an additional $25,000 in the business in exchange four 20 Billed patients $62,000 for services provided on account 25 Received $12.900 for services provided to customers who 6 Punchased supplies of 51,800 on account for capital stock paid cash rent on nedical, Paid expenses as follows: wages, $24,000: utilities, $6,000, 50 30 Paid dividends of $15,000 to stockholders (Dr. Hancocko. ze and record the January transactions for Oasis Health Care ment, $5,000, interest, $.200, and miscellaneous, $2,500. Instructions Inc., using the tt Record each transaction by date, and show the ork. each zem after each transaction. T shown below e January 1, 20Y6, balances for the balance ane t Liabilities Assets Equity Accts. Un. Wages Notes Capital Acc. Accts. Pre Cash + Rec + Ins. + Supp +Building - Depr Land Pay. Rev.+ Pay+ Pay. Stock n20000 34.500 700 10 10000-11.200 120,000 7,500 30,000 50000 27s +Eaning P3-2 Adjustment process Adjustment data for Oasis Health Care Inc. for January are as follows: 1 Insurance expired, $800. 2. Supplies on hand on January 31, $1,100. 3. Depreciation on building, $2,000. s. Unearmed rent revenue eaned, $2.500. 5. Wages owed employees but not paid, $1,700. 6. Services provided but not billed to patients, $10,000. Instructions Based on the transactions recorded in January for Problem 3-1, record the adjustments January using the integrated financial statement framework. P3-3 Financial statements Data for Oasis Health Care for January are provided in Problems 3-1 and 3-2 Instructions Prepare an income statement, retained earnings statement, and a clas January. The note payable is due in ten years. 1. Net income 3,500 an sified balance sho Chapter 3 Accrual Accounting Concepts 123 P3-4 Statement of cash flows Data for Oasis Health Care for January are provided in Problems 3-1, 3-2, and 33. Instructions 1. Prepare a statement of cash flows for January 2. Reconcile the net cash flows from operating activities with the net income for January Obj 4 holder Net cash flows from operating activities, $10,500 (Hint: See the appendix to this chapter and use adjusted balances in computing increases and decreases in accounts.) ffice in Obj 3 P3-5 Adjustments and errors At the end of May, the first month of operations, the following selected data were taken from the financial statements of Julie Mortenson, Attorney at Law, P.C 127,500 480,000 150,000 330,000 Net income for May Total assets at May 31 Total liabilities at May 31 Corrected net income, $127,075 in adv eant office1. Prepare a statement of cash flows for January ance Net cash flows from operating activities $10,500 2. Reconcile the net cash flows from operating activities with the net income for January (Hint. See the appendix to this chapter and use adjusted balances in computing increases and decreases in accounts.) unt Adjustments and errors P3-5 Obj 3 At the end of May, the first month of operations, the following selected data were taken from the financial statements of Julie Mortenson, Attorney at Law, P.C.: r capital stock Net income for May Total assets at May 31 Total liabilities at May 31 Total stockholders' equity at May 31 $127,500 480,000 cash. t on medical e income, $127,075 In preparing the financial statements, adjustments for the following data were overlooked a. Unbilled fees earned at May 31, $9,700 b. Depreciation of equipment for May. $8,000 c. Accrued wages at May 31, $1,150 d. Supplies used during May, $975 using the integrated ow the balance for e balance sheet are Instructions Determine the holders' equity at May 31. In addition to indicating the correct of each omitted adjustment by setting up and completing a columnar table similar to the one shown below. Adjustment (a) is presented as an example. Stockholders Equity amount of net income for May and the total assets, liabilities, and stock- ed amounts, indicate the effect correct pita Retained Total Stockholders' Total Total Assets Liabilities + 227,500 Net ,000 +Equity $330,000 $127500 $480,000 +9,700 +9,700 Adjustment (a) Adjustment (c) Adjustment (d) Corrected amounts