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INFORMATION FOR ALL PARTS Drs. Glenn Feltham and David Ambrose began operations of their physical therapy clinic, called Northland Physical Therapy, on January 1, 2017.

INFORMATION FOR ALL PARTS

Drs. Glenn Feltham and David Ambrose began operations of their physical therapy clinic, called Northland Physical Therapy, on January 1, 2017. The annual reporting period ends December 31. The trial balance on January 1, 2018, was as follows (the amounts are rounded to thousands of dollars to simplify):

Account Titles Debit Credit

Cash $7

Accounts Receivable 3

Supplies 3

Equipment 9

Accumulated Depreciation $1

Software 5

Accumulated Amortization 1

Accounts Payable 5

Notes Payable (short-term) 0

Salaries and Wages Payable 0

Interest Payable 0

Income Taxes Payable 0

Deferred Revenue 0

Common Stock 15

Retained Earnings 5

Service Revenue 0

Depreciation Expense 0

Amortization Expense 0

Salaries and Wages Expense 0

Supplies Expense 0

Interest Expense 0

Income Tax Expense 0

Totals $27 $27

Transactions during 2018 (summarized in thousands of dollars) follow:

Borrowed $17 cash on July 1, 2018, signing a six-month note payable.
Purchased equipment for $20 cash on July 2, 2018.
Issued additional shares of common stock for $5 on July 3.
Purchased software on July 4, $3 cash.
Purchased supplies on July 5 on account for future use, $7.
Recorded revenues on December 6 of $50, including $8 on credit and $42 received in cash.
Recognized salaries and wages expense on December 7 of $25; paid in cash.
Collected accounts receivable on December 8, $9.
Paid accounts payable on December 9, $10.
Received a $3 cash deposit on December 10 from a hospital for a contract to start January 5, 2019.

Data for adjusting journal entries on December 31:

Amortization for 2018, $1.
Supplies of $3 were counted on December 31, 2018.
Depreciation for 2018, $4.
Accrued interest of $1 on notes payable.
Salaries and wages incurred but not yet paid or recorded, $4.
Income tax expense for 2018 was $4 and will be paid in 2019.

PART 1

GENERAL JOURNAL

1.Record the borrowing $17 cash on July 1, 2018, signing a six-month note payable.

Transaction General Journal Debit Credit

a. Cash 17

Notes Payable (short-term) 17

2.Record the purchase of equipment for $20 cash on July 1, 2018.

Transaction General Journal Debit Credit

b. Equipment 20

Cash 20

3.Record the issuance of additional shares of common stock for $5.

Transaction General Journal Debit Credit

c. Cash 5

Common Stock 5

4.Record the purchase of software, $3 cash.

Transaction General Journal Debit Credit

d. Software 3

Cash 3

5.Record the purchase of supplies account for future use, $7.

Transaction General Journal Debit Credit

e. Supplies 7

Accounts Payable 7

6.Record the entry for revenues for 2018 of $50, including $8 on credit and $42 received in cash.

Transaction General Journal Debit Credit

f. Cash 42

Accounts Receivable 8

Service Revenue 50

7.Record salaries and wages expense for 2018 of $25, paid in cash.

Transaction General Journal Debit Credit

g. Salaries and Wages Expense 25

Cash 25

8.Record the collection of accounts receivable, $9.

Transaction General Journal Debit Credit

h. Cash 9

Accounts Receivable 9

9.Record the payment of accounts payable, $10.

Transaction General Journal Debit Credit

i. Accounts Payable 10

Cash 10

10.Record the receipt of $3 cash deposit from a hospital for a contract to start January 5, 2019.

Transaction General Journal Debit Credit

j. Cash 3

Deferred Revenue 3

PART 2

1, 3, 5 and 8.Set up T-accounts for the accounts on the trial balance. It is of extreme importance to enter the beginning balances and post the transactions(a)-(j), adjusting entries(k)-(p), and closing entry.(Enter your answers in thousands of dollars.)

Cash Accounts Receivable

Beg. Bal. [ ] [ ] Beg. Bal. [ ] [ ]

[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]

[ ] [ ] [ ] [ ] End. Bal. [ ] [ ]

[ ] [ ] [ ] [ ]

End. Bal. [ ] [ ]

Supplies Equipment

Beg. Bal. [ ] [ ] Beg. Bal. [ ] [ ]

[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]

End. Bal. [ ] [ ] End. Bal. [ ] [ ]

Accumulated Depreciation Software

Beg. Bal. [ ] [ ] Beg. Bal. [ ] [ ]

[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]

End. Bal. [ ] [ ] End. Bal. [ ] [ ]

Accumulated Amortization Accounts Payable

Beg. Bal. [ ] [ ] Beg. Bal. [ ] [ ]

[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]

End. Bal. [ ] [ ] End. Bal. [ ] [ ]

Notes Payable Salaries and Wages Payable

Beg. Bal. [ ] [ ] Beg. Bal. [ ] [ ]

[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]

End. Bal. [ ] [ ] End. Bal. [ ] [ ]

Interest Payable Income Taxes Payable

Beg. Bal. [ ] [ ] Beg. Bal. [ ] [ ]

[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]

End. Bal. [ ] [ ] End. Bal. [ ] [ ]

Deferred Revenue Common Stock

Beg. Bal. [ ] [ ] Beg. Bal. [ ] [ ]

[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]

End. Bal. [ ] [ ] End. Bal. [ ] [ ]

Retained Earnings Service Revenue

Beg. Bal. [ ] [ ] Beg. Bal. [ ] [ ]

[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]

End. Bal. [ ] [ ] End. Bal. [ ] [ ]

Depreciation Expense Amortization Expense

Beg. Bal. [ ] [ ] Beg. Bal. [ ] [ ]

[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]

End. Bal. [ ] [ ] End. Bal. [ ] [ ]

Salaries and Wages Expense Supplies Expense

Beg. Bal. [ ] [ ] Beg. Bal. [ ] [ ]

[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]

End. Bal. [ ] [ ] End. Bal. [ ] [ ]

Interest Expense Income Tax Expense

Beg. Bal. [ ] [ ] Beg. Bal. [ ] [ ]

[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]

End. Bal. [ ] [ ] End. Bal. [ ] [ ]

PART 3

Post the journal entries from requirement 2 to T-accounts and make an unadjusted trial balance.(Enter your answers in thousands of dollars.)

NORTHLAND PHYSICAL THERAPY

Unadjusted Trial Balance

[At December 31, 2018 OR For the Month Ended December 31, 2018 OR For the Year Ended December 31, 2018] ?

(in thousands)

Account Titles Debit Credit

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 [ ] [ ]

Salaries and Wages Expense [ ] [ ]

Supplies Expense [ ] [ ]

Depreciation Expense [ ] [ ]

Amortization Expense [ ] [ ]

Interest Expense [ ] [ ]

Income Tax Expense [ ] [ ]

Totals $[ ] $[ ]

PART 4

Record the adjusting journal entries(k)through(p).(If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)

For each transaction use the Format below. (Note: Enter debits before credits.)

1.Record the adjusting entry for amortization for 2018, $1.

Transaction General Journal Debit Credit

k. [ ] [ ] [ ]

2.Record the adjusting entry for supplies counted on December 31, 2018 for $3.

Transaction General Journal Debit Credit

l. [ ] [ ] [ ]

3.Record the adjusting entry for depreciation for 2018, $4.

Transaction General Journal Debit Credit

m. [ ] [ ] [ ]

4.Record the adjusting entry for accured interest for $1 on notes payable.

Transaction General Journal Debit Credit

n. [ ] [ ] [ ]

5.Record the adjusting entry for salaries and wages earned but not paid for $4.

Transaction General Journal Debit Credit

o. [ ] [ ] [ ]

6.Record the adjusting entry for income tax expense for 2018 for $4 that will be paid in 2019.

Transaction General Journal Debit Credit

p. [ ] [ ] [ ]

PART 5

Post the adjusting entries from requirement 4 and make an adjusted trial balance.(Enter your answers in thousands of dollars.)

NORTHLAND PHYSICAL THERAPY

Adjusted Trial Balance

[At December 31, 2018 OR For the Month Ended December 31, 2018 OR For the Year Ended December 31, 2018] ?

(in thousands)

Account Titles Debit Credit

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 [ ] [ ]

Salaries and Wages Expense [ ] [ ]

Supplies Expense [ ] [ ]

Depreciation Expense [ ] [ ]

Amortization Expense [ ] [ ]

Interest Expense [ ] [ ]

Income Tax Expense [ ] [ ]

Totals $[ ] $[ ]

PART 6

6-a.Make an income statement.

Make an income statement.(Enter your answers in thousands of dollars.)

NORTHLAND PHYSICAL THERAPY

Income Statement

[At December 31, 2018 OR For the Month Ended December 31, 2018 OR For the Year Ended December 31, 2018] ?

(in thousands)

[_____________________________________] [______________]

6-b.Prepare the statement of retained earnings.

Prepare the statement of retained earnings.(Enter your answers in thousands of dollars.)

NORTHLAND PHYSICAL THERAPY

Statement of Retained Earnings

[At December 31, 2018 OR For the Month Ended December 31, 2018 OR For the Year Ended December 31, 2018] ?

(in thousands)

Balance, January 1, 2018 $_____

[Add: Net Income OR Add: Net Loss OR Less: Net Income OR Less: Net Loss] ? $_____

[Add: Dividends OR Less: Dividends] ? $_____

Balance, December 31, 2018 $_____

6-c.Prepare the balance sheet.

Prepare the balance sheet.(Enter your answers in thousands of dollars. Amounts to be deducted should be indicated by a minus sign.)

NORTHLAND PHYSICAL THERAPY

Balance Sheet

[At December 31, 2018 OR For the Month Ended December 31, 2018 OR For the Year Ended December 31, 2018] ?

(in thousands)

[___________________________________________________________________] [__________________________________________________________________]

[_______________________________________] [__________] [__________] [_______________________________________] [__________] [__________]

PART 7

Prepare the closing journal entry.(If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)

A. Record entry to close revenue and expense accounts to retained earnings. (Note: Enter debits before credits.)

Transaction General Journal Debit Credit

1 [________________] [_________] [________]

[________________] [_________] [________]

PART 8

Post the closing entry from requirement 7 and make a post-closing trial balance.(Enter your answers in thousands of dollars.)

NORTHLAND PHYSICAL THERAPY

Post-Closing Trial Balance

[At December 31, 2018 OR For the Month Ended December 31, 2018 OR For the Year Ended December 31, 2018] ?

(in thousands)

Account Titles Debit Credit

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 [ ] [ ]

Salaries and Wages Expense [ ] [ ]

Supplies Expense [ ] [ ]

Depreciation Expense [ ] [ ]

Amortization Expense [ ] [ ]

Interest Expense [ ] [ ]

Income Tax Expense [ ] [ ]

Totals $[ ] $[ ]

PART 9

9-a.How much net income did the physical therapy clinic generate during 2018? What was its net profit margin?

How much net income did the physical therapy clinic generate during 2018? What was its net profit margin?(Enter "Net Income" in thousands of dollars. Round "Net Profit Margin" to 1 decimal place.)

Net Income __________

Net Profit Margin __________%

9-b.Is the business financed primarily by liabilities or stockholders' equity?

Is the business financed primarily by liabilities or stockholders' equity?

Stockholders' Equity OR Liabilities?

9-c.What is its current ratio?

What is its current ratio?(Enter your answers in thousands of dollars.)

Current Ratio

Numerator ________________ ___________

= = _____________

Denominator ________________ ___________

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