Question

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	$	8
Accounts Receivable		4
Supplies		4
Equipment		8
Accumulated Depreciation				$	1
Software		4
Accumulated Amortization					1
Accounts Payable					4
Notes Payable (short-term)					0
Salaries and Wages Payable					0
Interest Payable					0
Income Taxes Payable					0
Deferred Revenue					0
Common Stock					14
Retained Earnings					8
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	$	28		$	28

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

1. Borrowed $27 cash on July 1, 2018, signing a six-month note payable.
2. Purchased equipment for $30 cash on July 2, 2018.
3. Issued additional shares of common stock for $4 on July 3.
4. Purchased software on July 4, $4 cash.
5. Purchased supplies on July 5 on account for future use, $6.
6. Recorded revenues on December 6 of $62, including $10 on credit and $52 received in cash.
7. Recognized salaries and wages expense on December 7 of $35; paid in cash.
8. Collected accounts receivable on December 8, $7.
9. Paid accounts payable on December 9, $8.
10. Received a $4 cash deposit on December 10 from a hospital for a contract to start January 5, 2019.

Data for adjusting journal entries on December 31:

11. Amortization for 2018, $1.
12. Supplies of $4 were counted on December 31, 2018.
13. Depreciation for 2018, $2.
14. Accrued interest of $1 on notes payable.
15. Salaries and wages incurred but not yet paid or recorded, $2.
16. Income tax expense for 2018 was $5 and will be paid in 2019.

8. Post the closing entry from requirement 7 and prepare a post-closing trial balance.

Answer 1

		Transactions	Amount in $ thousands
A	1st July 2018	Cash     To Note payable	27
B	2nd July 2018	Equipment      To Cash	30
C	3rd July 2018	Cash     To Common Stock	4
D	4th July 2018	Software      To Cash	4
E	5th July 2018	Supplies      To Accounts Payable	6
F	6th December 2018	Cash Accounts Receivable          To Service Revenue	52 10 62
G	7th December 2018	Salaries and wages expense         To Cash	35
H	8 th December 2018	Cash     To Accounts receivable	7
I	9th December 2018	Accounts Payable     To Cash	8
J	10th December 2018	Cash     To Deferred revenue	4
K		Amortization Expense       To Accumulated Amortization	1
L		Supplies Expense     To Supplies	4
M		Depreciation     To Accumulated Depreciation	2
N		Interest Expense       To Interest Payable	1
O		Salaries and wages expense         To Salaries and wages payable	2
P		Income Tax Expense         To Income Tax Expense Payable	5

Closing Entry

	Closing Entry	Amount Thousand $
DR	Service Revenue	62
CR	Depreciation Expense	2
CR	Amortization Expense	1
CR	Salaries and Wages Expense	37
CR	Supplies Expense	4
CR	Interest Expense	1
CR	Income Tax Expense	5
CR	Retained Earnings	12

Post Closing Trial Balance

Account Titles	Debit			Credit
Cash	$	25
Accounts Receivable		7
Supplies		6
Equipment		38
Accumulated Depreciation				$	3
Software		8
Accumulated Amortization					2
Accounts Payable					2
Notes Payable (short-term)					27
Salaries and Wages Payable					2
Interest Payable					1
Income Taxes Payable					5
Deferred Revenue					4
Common Stock					18
Retained Earnings					20
Service Revenue					0
Depreciation Expense		0
Amortization Expense		0
Salaries and Wages Expense		0
Supplies Expense		0
Interest Expense		0
Income Tax Expense		0
TOTAL	$	84		$	84