Question
Q1: Read paragraphs 85 and 86 in Concepts Statement No. 5 Recognition and Measurement in Financial Statements of Business Enterprises and identify the three ways
Q1: Read paragraphs 85 and 86 in Concepts Statement No. 5 Recognition and Measurement in Financial Statements of Business Enterprises and identify the three ways that expense can be recognized in the income statement.
Q2. Listed below are the transactions of Rook Medical., for the month of March.
March 1 Rook begins practice as a family practitioner and invests $50,000 cash.
1 Purchases medical equipment on account from JK Enterprises for $22,800.
3 Pays rent for office space, $1,500 for the month.
3 Employs a receptionist, Michelle Kwin.
4 Purchases medical supplies for cash, $1,165.
10 Receives cash of $850 from patients for services performed.
15 Bills patients $11,560 for services performed.
21 Pays JK Enterprises. on account, $7,600.
23 Withdraws $3,000 cash from the business for personal use.
26 Receives $2,600 from patients on account.
30 Bills patients $6,890 for services performed.
31 Pays the following expenses in cash: Salaries and wages $2,500; miscellaneous office expenses $910.
31 Medical supplies used during the month, $695.
Instructions
(a) Enter the transactions shown above in appropriate general ledger accounts (use T-accounts). Use the following ledger accounts: Cash, Accounts Receivable, Supplies, Equipment, Accumulated DepreciationEquipment, Accounts Payable, Owners Capital, Service Revenue, Rent Expense, Office Expense, Salaries and Wages Expense, Supplies Expense, Depreciation Expense, and Income Summary. Allow 10 lines for the Cash and Income Summary accounts, and 5 lines for each of the other accounts needed. Record depreciation using a 5-year life on the equipment, the straight-line method, and no salvage value. Do not use a drawing account. You may close income summary account into Owners Capital account.
(b) Prepare an income statement, a statement of owners equity, and an unclassified balance sheet.
Q3. A review of the ledger of Dallas Company at December 31, 2017, produces the following data pertaining to the preparation of annual adjusting entries.
1. Salaries and Wages Payable $0. There are nine employees. Salaries and wages are paid every Friday for the current week. Five employees receive $850 each per week, and four employees earn $500 each per week. December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December.
2. Unearned Rent Revenue $660,000. The company began leasing office space in its new building on October 1. Each tenant is required to make a $10,000 security deposit that is not refundable until occupancy is terminated. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease.
Date Term (in months) Monthly Rent Number of Leases
Oct. 1 12 $ 8,000 2
Nov. 1 6 $10,000 1
Dec. 1 12 $ 8,500 4
3. Prepaid Advertising $23,400. This balance consists of payments on three advertising contracts. The contracts provide for monthly advertising in three trade magazines. The terms of the contracts are as shown below.
Contract Date Amount Number of Magazine Issues
J5K July 1 $6,000 12
K56 Oct 1 $8,400 12
L76H Dec 1 $9,000 6
The first advertisement runs in the month in which the contract is signed.
4. Notes Payable $108,000. This balance consists of a note for one year at an annual interest rate of 10%, dated September 1.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started