Question

Jennifer Davis, D.D.S., opened a dental practice on January 1, 2020. During the first month of operations, the following transactions occurred.

1. Performed services for patients who had dental plan insurance. At January 31, $797 of such services was performed but not yet billed to the insurance companies.

2. Utility expenses incurred but not paid prior to January 31 totaled $469.

3. Purchased dental equipment on January 1 for $75,000, paying $20,000 in cash and signing a $55,000, 3-year note payable. (a) The equipment depreciates $383 per month. (b) Interest is $450 per month.

4. Purchased a one-year malpractice insurance policy on January 1 for $11,400.

5. Purchased $1,529 of dental supplies. On January 31, determined that $470 of supplies were on hand.

Prepare the adjusting entries on January 31. Account titles are Accumulated Depreciation—Equipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense, Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities Expenses, and Accounts Payable.

Answer 1

Adjusting entries are as follows÷ (Amt in $)

1.Jan 31

Unbilled revenue(account receivables*) a/ c dr.   797

To service revenue a/c 797

(Being unbilled revenue booked )

*As it is unbilled so unbilled revenue a/c should be used but in above account titles unbilled revenue a/c is not there so iI have used unbilled revenue and in brackets as account receivable.

2. Jan 31

Utilities expenses a/c dr.    469

To Account payable a/ c 469

(Being utilities expenses accounted)

3. Jan 1

Equipment a/ c dr. 75,000

To cash a/ c 20,000

To note payable a/c 55,000

(Being equipment purchased accounted)

Jan 31

Depreciation a/ c dr. 383

To accumulated depreciation a/c 383

(Being depreciation accounted)

Jan 31

Interest expenses a/ c 450

To interest payable a/c 450

(Being interest expenses accounted)

4.Jan 1

Prepaid insurance a/c dr. 11,400

To cash a/ c 11,400

(Being insurance purchased accounted)

Assumed amt is paid in cash

Jan 31

Insurance expenses a/c dr. 950**

To prepaid expenses a/c 950

(Being insurance expenses booked and prepaid expenses adjusted)

**11,400/12=950

5.Jan 1

Supplies a/ c dr. 1,529

To cash a/ c 1,529

(Being supplies purchased)

Assumed amt is paid in cash

Jan 31

Supplies expenses a/c dr. 1,059***

To supplies a/c 1,059

(Being supplies expenses accounted)

***1,529-470=1,059

NOTE ÷

a.entries.. on Jan 1 is also passed only becsuse for better understanding of entries on Jan 31.

b. Entries dt. as Jan 31 are adjusting entries.