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	$	6
Accounts Receivable		2
Supplies		2
Equipment		10
Accumulated Depreciation				$	3
Software		8
Accumulated Amortization					3
Accounts Payable					5
Notes Payable (short-term)					0
Salaries and Wages Payable					0
Interest Payable					0
Income Taxes Payable					0
Deferred Revenue					0
Common Stock					16
Retained Earnings					1
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 $26 cash on July 1, 2018, signing a six-month note payable.
2. Purchased equipment for $29 cash on July 2, 2018.
3. Issued additional shares of common stock for $6 on July 3.
4. Purchased software on July 4, $2 cash.
5. Purchased supplies on July 5 on account for future use, $8.
6. Recorded revenues on December 6 of $60, including $9 on credit and $51 received in cash.
7. Recognized salaries and wages expense on December 7 of $34; paid in cash.
8. Collected accounts receivable on December 8, $8.
9. Paid accounts payable on December 9, $9.
10. Received a $2 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, $3.
12. Supplies of $2 were counted on December 31, 2018.
13. Depreciation for 2018, $3.
14. Accrued interest of $1 on notes payable.
15. Salaries and wages incurred but not yet paid or recorded, $4.
16. Income tax expense for 2018 was $3 and will be paid in 2019.

1. Post the adjusting entries from requirement 4 and prepare an adjusted trial balance. (Enter your answers in thousands of dollars.)

Answer 1

Date	Journal	Debit	Credit
		(In thousands)$	(In thousands)$
July 1,2018	Cash	26
	Note payable		26
	(Borrowed through note payable)
July 2,2018	Equipment	29
	Cash		29
	(Purchase of equipment)
July 3,2018	Cash	6
	Common stock	6
	(Issue of common stock)
July 4,2018	Software	2
	Cash		2
	(Purchase of software)
July 5,2018	Supplies	8
	Accounts payable	8
	(Purchase of supplies)
Dec. 6,2018	Cash	51
	Accounts receivable	9
	Service revenue	60
	(revenue recorded)
Dec. 7,2018	Salaries and wages expense	34
	Cash		34
	(Salaries paid)
Dec. 8,2018	Cash	8
	Accounts receivable	8
	(Accounts receivable collected)
Dec. 9,2018	Accounts payable	9
	Cash		9
	(Accounts payable paid)
Dec. 10,2018	Cash	2
	Deferred revenue	2
	(revenure received )
Adjusting entries
Dec. 31,2018	Amortization expense	3
	Accumulated amortization	3
	(Amortization accounted)
Dec. 31,2018	Supplies expense	2
	Supplies		2
	(Supplies consumed)
Dec. 31,2018	Depreciation expense	3
	Accumulated depreciation	3
	(Depreciation accounted)
Dec. 31,2018	Interest expense	1
	Interest payable	1
	(Accrued interest on notes payable accounted)
Dec. 31,2018	Salaries and wages expense	4
	Salaries and wages payable	4
	(Accrued salaries and wages expense accounted)
Dec. 31,2018	Income tax expense	3
	Income tax payable	3
	(Income tax expense accounted)

Cash A/c

Beg.bal.	6	Equipment	29
Note payable	26	Software	2
Common stock	6	Salaries and wages expense	34
Sales	51	Accounts payable	9
Accounts receivable	8	end balance	25
Deferred revenue	2

Accounts receivabe
Beg.bal.	2	cash	8
Sales	9
End. Bal.	3

Supplies
Beg.bal.	2	Supplies expense	2
Accounts payable	8
End. Bal.	8

Equipment
Beg.bal.	10	end balance	39
Cash	29

Accumulated depreciation
Beg.bal.	-	3
Depreciation expense		3
End. Bal.		6

Software
Beg.bal.	8	0
Cash	2
End. Bal.	10

Accumulated amortization
Beg.bal.		3
Amortization expense		3
End. Bal.	-	6

Accounts payable
Beg.bal.		5
Supplies		8
Cash	9
End. Bal.		4

Notes payable (short term)
Beg.bal.	-
Cash		26
End. Bal.		26

Salaries and wages payable
Beg.bal.	0
Salaries and wages expense		4
End. Bal.		4

Common stock
Beg.bal.	-	16
Cash		6
End. Bal.		22

Salaries and wages expense
Beg.bal.		0
Cash	34
Salaries and wages payable	4
End. Bal.	38

Drs. Glenn Feltham and David Ambrose
Trial Balance
As on December 31 2018
	Debit	Credit
Cash	$ 25
Accounts Receivable	$ 3
Supplies	$ 8
Equipment	$ 39
Accumulated Depreciation		$ 6
Software	$ 10
Accumulated Amortization		$ 6
Accounts Payable		$ 4
Notes Payable (Short-term)		$ 26
Notes Payable (Long-term)		$0
Salaries and Wages Payable		$ 4
Interest Payable		$1
Income Tax Payable		$ 3
Deferred Revenue		$ 2
Common Stock		$ 22
Retained Earnings		$ 1
Service Revenue		$ 60
Supplies Expense	$ 2
Depreciation Expense	$ 3
Salaries and Wages Expense	$38
Amortization Expense	$ 3
Interest Expense	$1
Income Tax Expense	$ 3
Totals	$135	$135