Read the attahed document named "ACCT212_9E_WorkingPapers_E2-16A.xlsx" to conduct peer reviews of my clsassmates for the two post on the document named "Peer Review"

FINANCIAL ACCOUNTING - Eighth Edition Solutions Manual E2-16A (10-20 min.) Learning Objective 1: Analyzing transactions; using the accounting equation Bob Morin opened a medical practice specializing in surgery. During the first month of operation (August), the business, titled Bob Morin, Professional Corporation (P.C.), experienced the following events: Aug. 6 9 12 15 15-31 15-31 31 31 31 Morin invested 39,000 in the business, which in turn issued its common stock to him. The business paid cash for land costing $29,000. Morin plans to build an office building on the land. The business purchased medical supplies for $1,700 on account. Bob Morin, P.C., officially opened for business. During the rest of the month, Morin treated patients and earned service revenue of $7,600, receiving cash for half the revenue earned. The business paid cash expenses: employee salaries, $1,300; office rent, $700; utilities, $500. The business sold supplies to another physician for cost of $700. The business borrowed $12,000, signing a note payable to the bank. The business paid $1,800 on account. 1. Analyze the effects of these events on the accounting equation of the medical practice of Bob Morin, P.C. 2. After completing the analysis, answer these questions about the business. a. b. c. d. e. How much are total assets? How much does the business expect to collect from patients? How much does the business owe in total? How much of the business's assets does Morin really own? How much net income or net loss did the business experience during its first month of operations? Chapter 2: Transaction Analysis Page 1 of 2 FINANCIAL ACCOUNTING - Eighth Edition Solutions Manual Solution: Req. 1 Analysis of Transactions Cash ASSETS Accounts Medical + + + Receivable Supplies = Land LIABILITIES + Accounts Note = + + Payable Payable STOCKHOLDERS' EQUITY Common Retained Type of Stockholders' + Stock Earnings Equity Transaction Req. 2 a. b. c. d. e. Chapter 2: Transaction Analysis Page 2 of 2 1. Christopher Barreto What is the difference between Prepaid Rent and Rent Expense? Rent expense - The amount of rent a company pays over whatever period is being covered on the income statement. It is the actual amount of rent paid or amount of prepaid rent used. A company that pays $1,500 a month for rent must debit rent expense for $1,500 and credit cash for $1,500. Prepaid Rent - Amount of rent that has been paid in advance. It appears on the balance sheet. With prepaid rent, we need to make adjusting entries each month to allocate the amount used to the expense account. For example, a company pays $1,500 in rent each month and has a 1 year lease so rent is $18,000 per year. I am assuming a calendar year lease beginning Jan. 1. On Jan 1 the company pays for a years rent. This is a debit to prepaid rent for $18,000 and credit cash $18,000. When rent is prepaid we need to make an adjusting entry each month to reflect that 1 months worth of rent has been used. We do this by a debit to rent expense for $1,500 on Jan. 1, Feb. 1, etc. and a credit to rent expense. If we ran the income statement and the balance sheet on June 30 we would see that these two account values would be Rent Expense - $9,000 and Prepaid Rent $9,000. 2. Diana Romero What is the difference between Wages Expense and Wages Payable? Wage expense is the dollar amount of wages paid. Wages payable is the amount of work that has been completed by the companies employees and is due to them from the company at a future date. Wages Expense is an Expense account and Wages Payable is Liability account. To account for Wages Expense we must first debit the account for the amount of labor costs during the pay period and credits multiple payable accounts, for example, Wages payable, Taxes, Insurance, Retirement, and Garnishments. When we look at our paystub we see all the deductions to our pay. The company has to account for those items plus any matching or federally required payments. A debit to wages expense for $2,000 may result in debits of $100 for FICA taxes, $50 for federal taxes, $ 15 for state taxes, $180 in health insurance premiums, $100 in 401(k) deposits, $50 in Union Dues and $1,505 in Wages Payable. Wages Payable is a Liability on the balance sheet