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	$	7
Accounts Receivable		3
Supplies		3
Equipment		10
Accumulated Depreciation				$	2
Software		6
Accumulated Amortization					2
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					15
Retained Earnings					5
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	$	29		$	29

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

1. Borrowed $28 cash on July 1, 2018, signing a six-month note payable.
2. Purchased equipment for $31 cash on July 2, 2018.
3. Issued additional shares of common stock for $5 on July 3.
4. Purchased software on July 4, $3 cash.
5. Purchased supplies on July 5 on account for future use, $7.
6. Recorded revenues on December 6 of $61, including $8 on credit and $53 received in cash.
7. Recognized salaries and wages expense on December 7 of $36; paid in cash.
8. Collected accounts receivable on December 8, $9.
9. Paid accounts payable on December 9, $10.
10. Received a $3 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, $2.
12. Supplies of $3 were counted on December 31, 2018.
13. Depreciation for 2018, $4.
14. Accrued interest of $1 on notes payable.
15. Salaries and wages incurred but not yet paid or recorded, $3.
16. Income tax expense for 2018 was $4 and will be paid in 2019.

- Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions (a)-(j), adjusting entries (k)-(p), and closing entry. (Enter your answers in thousands of dollars.)

- Prepare the closing journal entry. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)

Answer 1

Cash					Accounts receivable
Beg. Bal.	$ 7				Beg. Bal.	$ 3
a)	$ 28	$ 31	b)		f)	$ 8	$ 9	h)
c)	$ 5	$ 3	d)
f)	$ 53	$ 36	g)
h)	$ 9	$ 10	i)		End. Bal.	$ 2
j)	$ 3
End. Bal.	$ 25
Supplies					Equipment
Beg. Bal.	$ 3				Beg. Bal.	$ 10
e)	$ 7	$ 7	L)		b)	$ 31
End. Bal.	$ 3				End. Bal.	$ 41
Accumulated Depreciation					Software
Beg. Bal.		$ 2			Beg. Bal.	$ 6
		$ 4	m)		d)	$ 3
End. Bal.		$ 6			End. Bal.	$ 9
Accumulated Amortization					Accounts Payable
Beg. Bal.		$ 2			Beg. Bal.		$ 5
		$ 2	k)		i)	$ 10	$ 7	e)
End. Bal.		$ 4			End. Bal.		$ 2
Notes Payable (Short term)					Salaries and Wages Payable
Beg. Bal.		$ 0			Beg. Bal.		$ 0
		$ 28	a)				$ 3	o)
End. Bal.		$ 28			End. Bal.		$ 3
Interest Payable					Income Tax payable
Beg. Bal.		$ 0			Beg. Bal.		$ 0
		$ 1	n)				$ 4	p)
End. Bal.		$ 1			End. Bal.		$ 4
Deferred Revenue					Common Stock
Beg. Bal.		$ 0			Beg. Bal.		$ 15
		$ 3	j)				$ 5	c)
End. Bal.		$ 3			End. Bal.		$ 20
Retained Earnings					Service Revenue
Beg. Bal.		$ 5			Beg. Bal.		$ 0
							$ 63	f)
End. Bal.		$ 5			End. Bal.		$63
Depreciation Expense					Amortization Expense
Beg. Bal.	$ 0				Beg. Bal.	$ 0
m)	$ 4				k)	$ 2
End. Bal.	$ 4				End. Bal.	$ 2
Salaries and Wages Expenses					Supplies Expenses
Beg. Bal.	$ 0				Beg. Bal.	$ 0
g)	$ 36				L)	$ 7
o)	$ 3
End. Bal.	$ 39				End. Bal.	$ 7
Interest Expense					Income Tax Expense
Beg. Bal.	$ 0				Beg. Bal.	$ 0
n)	$ 1				p)	$ 4
End. Bal.	$ 1				End. Bal.	$ 4

Required 2 :
Closing Entries :
Date.	General journal	Debit	Credit
Dec-31	Service Revenue	$ 63
	Income summary		$ 63
	(To record Close the Service Revenue Account )
Dec-31	Income Summary (Balance in Figure)	$ 57
	Depreciation Expense		$ 4
	Amortization Expense		$ 2
	Salaries and wages Expense		$ 39
	Supplies Expense		$ 7
	Interest Expense		$ 1
	Income tax expense		$ 4
	(To record Close the All Expenses Account )
Dec-31	Income Summary ($ 63 -$57 )	$ 6
	Retained earnings		$ 6
	(To record Net income transferred to Retained earnings)