Problems P3-1 Espresso Health Care Inc. is owned and operated by Dr. Merri Eversole, the sole...

Transcribed Image Text:

Problems P3-1 Espresso Health Care Inc. is owned and operated by Dr. Merri Eversole, the sole stockholder. During July 2011, Espresso Health Care entered into the following transactions: July 1 Received $18,000 from Bradshaw Company as rent for the use of a vacant office in Espresso Health Care's building Beadshaw paid the sent six months in advance. 1 Paid $4,200 for an insurance premium on a general business policy. 6 Purchased supplies of $1,800 on account. 9 Collected $17.500 for services provided to customers on account. 11 Paid creditors $3,000 on account. 18 Invested an additional $50,000 in the business in exchange for capital stock 20 Billed patients $49,000 for services provided on account. 25 Received $12.900 for services provided to customers who paid cash. 30 Paid expenses as follow: wages, $24,000; utilities, $6,000, rent on medical equipment, $5,000, interest, $200, and miscellaneous, $2.500. 30 Paid dividends of $10,000 to stockholders (Dr. Eversole). Instructions Analyze and record the July transactions for Espresso Health Care Inc., using the integrated financial statement framework. Record each transaction by date and show the balance for each item after each transaction. The July 1, 2011, balances for the balance sheet are shown below. Acc Liabilities Stockholders' Equity Acts Un Wages Notes Capital Rec Cash Rec. Supp. Building-Dep. Land Pay Rev Pay Pay Stock Eam Bal, July 120,000 24,500 700 1,000 150,000-11,200 120,000 7,500 0 30,000 40,000 227,500 P3-2 Adjustment data for Espresso Health Care Inc. for July are as follows: 1. Insurance expired, $800. 2. Supplies on hand on July 31, $1.100. P3-3 F 004 Accrual Accounting Compte 3. Depreciation on building. $2,000. 1. Unearned rent revenue earned $3,000, 5. Wages owed employees but not paid, $1,700. 6. Services provided but not billed to patients, $9,000. Instructions Based upon the transactions recorded in July for Problem 3-1, record the adjustments for July using the integrated financial statement framework. Data for Expresso Health Care for July are provided in Problems 3-1 and 3-2 Instructions Prepare an income statement, retained earnings statement, and a classified balance sheet for July. The notes payable is due in 2015. P3-4 Data for Expresso Health Care for July are provided in Problems 3-1.3-2, and 3-3 Instructions 1. Prepare a statement of cash flows for July. 2. Reconcile the net cash flows from operating activities with the net income for July. (Hint See the appendix to this chapter and use adjusted balances in computing increases and decreases in accounts) Problems P3-1 Espresso Health Care Inc. is owned and operated by Dr. Merri Eversole, the sole stockholder. During July 2011, Espresso Health Care entered into the following transactions: July 1 Received $18,000 from Bradshaw Company as rent for the use of a vacant office in Espresso Health Care's building Beadshaw paid the sent six months in advance. 1 Paid $4,200 for an insurance premium on a general business policy. 6 Purchased supplies of $1,800 on account. 9 Collected $17.500 for services provided to customers on account. 11 Paid creditors $3,000 on account. 18 Invested an additional $50,000 in the business in exchange for capital stock 20 Billed patients $49,000 for services provided on account. 25 Received $12.900 for services provided to customers who paid cash. 30 Paid expenses as follow: wages, $24,000; utilities, $6,000, rent on medical equipment, $5,000, interest, $200, and miscellaneous, $2.500. 30 Paid dividends of $10,000 to stockholders (Dr. Eversole). Instructions Analyze and record the July transactions for Espresso Health Care Inc., using the integrated financial statement framework. Record each transaction by date and show the balance for each item after each transaction. The July 1, 2011, balances for the balance sheet are shown below. Acc Liabilities Stockholders' Equity Acts Un Wages Notes Capital Rec Cash Rec. Supp. Building-Dep. Land Pay Rev Pay Pay Stock Eam Bal, July 120,000 24,500 700 1,000 150,000-11,200 120,000 7,500 0 30,000 40,000 227,500 P3-2 Adjustment data for Espresso Health Care Inc. for July are as follows: 1. Insurance expired, $800. 2. Supplies on hand on July 31, $1.100. P3-3 F 004 Accrual Accounting Compte 3. Depreciation on building. $2,000. 1. Unearned rent revenue earned $3,000, 5. Wages owed employees but not paid, $1,700. 6. Services provided but not billed to patients, $9,000. Instructions Based upon the transactions recorded in July for Problem 3-1, record the adjustments for July using the integrated financial statement framework. Data for Expresso Health Care for July are provided in Problems 3-1 and 3-2 Instructions Prepare an income statement, retained earnings statement, and a classified balance sheet for July. The notes payable is due in 2015. P3-4 Data for Expresso Health Care for July are provided in Problems 3-1.3-2, and 3-3 Instructions 1. Prepare a statement of cash flows for July. 2. Reconcile the net cash flows from operating activities with the net income for July. (Hint See the appendix to this chapter and use adjusted balances in computing increases and decreases in accounts)