Transactions for Family Health Care for November and December

Below are the November transactions:

1. On November 1, received $1,800 from ILS Co. as rent for the use of Family Health Care's land as a temporary parking lot from November 2020 through March 2021.
2. On November 1, paid $2,400 for an insurance premium on a 2-year, general business policy.
3. On November 1, paid $6,000 for an insurance premium on a six-month medical malpractice policy.
4. Dr. Landry invested an additional $5,000 in the business in exchange for capital stock.
5. Purchased supplies for $240 on account.
6. Purchased $8,500- of office equipment. Paid $1,700 cash as a down payment, with the remaining $6,800 due in five monthly installments of $1,360 beginning January 1^st.
7. Provided services of $6,100 to patients on account.
8. Received $5,500 for services provided to patients who paid cash.
9. Received $4,200 from insurance companies, which paid on patients' accounts for services that have been provided.
10. Paid $100 on account for supplies that had been purchased.
11. Expenses paid during November were as follows: wages, $2,790, rent, $800, utilities, $580, interest, $100, and miscellaneous, $420.
12. Paid dividends of $1,200 to stockholders (Dr. Landry).

Balances as of November 1^st:

Prepaid Office Notes Wages Unearned

Cash + A/R +Insur + Sup. +Equip - A/D + Land = Pay + A/P +Pay + Rev + Stock + R/E 7,320 12,000 =10,000 6,000 3,320

1,800 1,800

-2,400 +2,400

-6,000 +6,000

5,000 5,000

240 240

-1,700 8,500 6,800

6,100 6,100

5,500 5,500

4,200 -4,200

-100 -100

-4,690 -4,690

-1,200 -1,200

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7,730 1,900 8,400240 8,500 12,000 16,800140 1,800 11,0009,030

-1100 -1,100

-150 -150

-160 -160

- 360 360

220 -220

750 750

7,730 2,650 7,30090 8,500 -160 12,000 = 16,800 140 220 1,440 11,000 8,510

Adjustments for the end of November:

1. Prepaid insurance expired, $1,100
2. Supplies used, $150
3. Depreciation on office equipment, $160.
4. Unearned revenue earned, $360.
5. Wages owed but not paid to employees, $220.
6. Services provide but not billed to insurance companies, $750.

Prepare an Income Statement, Statement of Retained Earnings and Balance Sheet for the month of November It should be in the following format:

1. The income statement summaries the revenue and expenses for a specific period of time, such as a month or a year.

Revenue: The increase in assets from selling products or services to customers. Examples of revenue are: sales, service revenue, interest income, rental income

Expenses: Costs used to earn revenues. Examples of costs are: COG (Cost of Goods Sold) wage expense, utility expense, transportation expense, advertising expense, rent expense, interest expense, supplies expense, depreciation expense, etc........

Income Statement

Anderson Corporation

January 1 - December 31, 2020

Revenue:

Less: Expenses

-----------------

Net Income

Net Income flows from the Income Statement to the Statement of Retained Earnings:

Retained Earnings:Net income retained in a corporation.Dividends are paid out of retained earnings and are NOT an expense on the income statement.

The Retained Earnings Statement summarizes the changes in the retained earnings in a corporation for a specific period of time, such as a month or a year.

Statement of Retained Earnings

Anderson Corporation

Year Ended December 31, 2020

Beginning Retained Earnings

+/- Net Income (Net Loss)

- Dividends

---------------

Ending Retained Earnings

Retained Earnings flows to the Balance Sheet in the Equity Section

Assets = Liabilities+ Equity

Balance Sheet: A list of the assets, liabilities, and owner's equity as of a specific date, usually at the close of the last day of a month or a year.

Assets: The resources owned by a business. Assets are divided into two

Categories.

Short-Term (Current Assets): either cash, intended to be converted into

cash or used up in less than 1 year.

Long-Term (Non-Current Assets): intended to be used in the business

and have a useful life greater than 1 year.

Liabilities: The rights of creditors that represent a legal obligation to

Repay an amount borrowed or an obligation to perform a

Service for money already received. Liabilities are also

Classified as either Current or Non-Current depending on

When the money is due or when the service is required to be

Performed.

The Basic Equation is:ASSETS = LIABILITIES + EQUITY

Balance Sheet

Anderson Corporation

Year Ended December 31, 2020

Assets:

Current Assets

Long-term Assets

Total Assets

Liabilities: + Equity:

Current Liabilities Common Stock

Retained Earnings

Long-term Liabilities

Total Liabilities Total Equity

Question 2: Calculate Net Income in each separate scenario:

Total Assets Total Liabilities

Beg. of year $315,000 $132,000

End of year $582,000 $255,000

Co. A No additional capital stock was issued, and no dividends were paid

Co. B No additional capital stock was issued, but dividends of $30,000 were paid out.

Co. C Capital stock of $ 45,000 was issued, but no dividends were paid.

Co. D Capital stock of $45,000 was issued, and dividends of $30,000 were paid.

Assets = Liabilities + Equity

$315,000 = 132,000 + 183,000

582,000 = 255,000 + 327,000

Increase in equity is: $144,000

The increase in equity can be attributable to two things:

1. Increase in stock
2. Increase in Retained Earnings (R/E) which is attributable to Net Income (NI) minus Dividends

Co. A---Since the increase is only attributable to an increase in R/E, that means that NI was $144,000.

Co. BSince the increase is only attributable to an increase in R/E and dividends of $30,000 were paid then the following equation is used:

Beg. R/E + NI -Dividends = Ending R/E

NI -30,000 = 144,000

NI =$174,000

Co. C

Co. D

Note: Equity increased by $144,00 as did stock so there is a difference in NI