Question

Here are the transactions of Rock Medical Company (a service company organized as a corporation), for the month of March. Record the following transactions for Rock Medical Company.

Mar    1       Jim Rock invests $50,000 cash in exchange for common stock in

                  Rock Medical Company.

         1       Takes out a $5,000, 30-day short term note payable with an annual

                  interest rate of 6%.

         1       Purchases medical equipment on account from JK Enterprises

                  for $22,800.

         3       Pays rent for office space, $1,500 for the month.

         3       Employs a receptionist, Michelle Kwin.

         4      Purchases medical supplies for cash, $1,165.

         10      Receives cash of $850 from patients for services performed.

         15      Bills patients $11,560 for services performed.

         21      Pays JK Enterprises on account, $7,600.

         26      Receives $2,600 from patients on account.

         30      Bills patients $6,890 for services performed.

         31      Pays the following expenses in cash: Salaries and

                  wages $2,500; miscellaneous office expenses $910.

         31      Pays principal and interest on the note payable.

         31      Medical supplies used during the month, $695.

         31     Record depreciation expense on the equipment using the straight line

                  method; the equipment has a 5-year life and no salvage value.

         31     Record utility expense of $200 incurred for the month; bill not

                  paid at month end

Chart of Accounts:

Cash

Accounts Receivable

Supplies

Equipment

Accumulated Depreciation—Equipment

Accounts Payable

Notes Payable (short term)

Common Stock

Note Payable

Service Revenue

Rent Expense

Office Expense

Salaries and Wages Expense

Supplies Expense

Depreciation Expense

Interest Expense

Utility Expense

Income Summary

Instructions

(a) Prepare journal entries to record the above transactions for Rock Medical Company; journal entries can be hand written or typed in Word/Excel; put on a separate page(s).

(b) Enter the transactions shown above in appropriate general ledger accounts (use T-accounts); t-accounts can be hand written; put on a separate page from journal entries prepared in (a).

(c) Prepare a trial balance in EXCEL; use formulas to total the debits and credits; PRINT on one page.

(d) Prepare an income statement, a statement of retained earnings, and an unclassified balance sheet in EXCEL; use formulas as appropriate; PRINT each on a SEPARATE page

(e) Prepare closing entries and enter the transactions in the T-accounts (from part (b); journal entries can be handwritten or typed in Word/Excel; put on a separate page(s).

(f) Prepare a post-closing trial balance in EXCEL; use formulas to total the debits and credit

Answer 1

Answer a.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1-Mar	Cash	50,000.00
	Common Stock		50,000.00
	(record the issue of Common Stock)
1-Mar	Cash	5,000.00
	Notes Payable (Short Term)		5,000.00
	(record the loan taken on short term)
1-Mar	Equipment	22,800.00
	Accounts Payable		22,800.00
	(Record the purchase of Medical Equip.)
3-Mar	Rent Expenses	1,500.00
	Cash		1,500.00
	(record the rent paid)
3-Mar	No Journal Entry for employ of receptionist
4-Mar	Supplies	1,165.00
	Cash		1,165.00
	(record the purchase of medical supplies)
10-Mar	Cash	850.00
	Service Revenue		850.00
	(Record the service revenue)
15-Mar	Accounts Receivable	11,560.00
	Service Revenue		11,560.00
	(Record the service revenue)
21-Mar	Accounts Payable	7,600.00
	Cash		7,600.00
	(Record the payment made to JK Entt.)
26-Mar	Cash	2,600.00
	Accounts Receivable		2,600.00
	(record the cash recd from patients)
30-Mar	Accounts Receivable	6,890.00
	Service Revenue		6,890.00
	(Record the service revenue)
31-Mar	Notes Payable (Short Term)	5,000.00
	Interest Expense	25.00
	Cash		5,025.00
	(Record the note paid)
31-Mar	Supplies Expenses	695.00
	Supplies		695.00
	(record the supplies used)
31-Mar	Depreciation Expense	380.00
	Accumulated Depreciation - Equipment		380.00
	(Record the dep. Expense).
	Dep. Exp = $22,800 /5 Years X (1/12) = $380
31-Mar	Utility Expenses	200.00
	Accounts Payable		200.00
	(record the utility expenses)

Answer b.
Cash					Accounts Receivable					Supplies
Beg. Bal.	-	1,500.00	3-Mar		Beg. Bal.	-	2,600.00	26-Mar		Beg. Bal.	-	695.00	31-Mar
1-Mar	50,000.00	1,165.00	4-Mar		15-Mar	11,560.00				4-Mar	1,165.00
1-Mar	5,000.00	7,600.00	21-Mar		30-Mar	6,890.00
10-Mar	850.00	5,025.00	31-Mar
26-Mar	2,600.00
End. Bal.	43,160.00				End. Bal.	15,850.00				End. Bal.	470.00
Equipment					Common Stock					Notes Payable (Short Term)
Beg. Bal.	-				Beg. Bal.		-			Beg. Bal.		-
1-Mar	22,800.00						50,000.00	1-Mar		31-Mar	5,000.00	5,000.00	1-Mar
End. Bal.	22,800.00				End. Bal.		50,000.00			End. Bal.		-
Accounts Payable					Service Revenue					Rent Expense
Beg. Bal.		-			Beg. Bal.		-			Beg. Bal.	-
21-Mar	7,600.00	22,800.00	1-Mar				850.00	10-Mar		3-Mar	1,500.00
		200.00	31-Mar				11,560.00	15-Mar
							6,890.00	30-Mar
End. Bal.		15,400.00			End. Bal.		19,300.00			End. Bal.	1,500.00
Interest Expense					Supllies Expense					Accumulated Depreciation - Equipment
31-Mar	25.00				31-Mar	695.00						380.00	31-Mar
End. Bal.	25.00				End. Bal.	695.00				End. Bal.		380.00
Depreciation Expense					Utility Expense
31-Mar	380.00				31-Mar	200.00
End. Bal.	380.00				End. Bal.	200.00

Answer c.
Trial Balance
Accounts Title	Debits	Credits
Cash	43,160.00
Accounts Receivable	15,850.00
Supplies	470.00
Equipment	22,800.00
Accumulated Depreciation - Equipment		380.00
Common Stock		50,000.00
Notes Payable (Short Term)		-
Accounts Payable		15,400.00
Service Revenue		19,300.00
Rent Expense	1,500.00
Interest Expense	25.00
Supllies Expense	695.00
Depreciation Expense	380.00
Utility Expense	200.00
Total	85,080.00	85,080.00
		-
Answer d.
Rock Medical Company
Income Statement
Month Ended Mar 31
Revenues:
Service Revenue		19,300.00
Expenses
Rent Expense	1,500.00
Interest Expense	25.00
Supllies Expense	695.00
Depreciation Expense	380.00
Utility Expense	200.00
Total Expenses		2,800.00
Net Income (Loss)		16,500.00
Rock Medical Company
Statement of Retained Earnings
Month Ended Mar 31
Retained Earnings - Mar 1	-
Net Income (Loss)	16,500.00
Retained Earnings - June 30, 2018	16,500.00
Rock Medical Company
Balance Sheet
Mar 31
Assets
Current Assets
Cash	43,160.00
Accounts Receivable	15,850.00
Supplies	470.00
Total Current Assets		59,480.00
Property, Plant & Equipment
Equipment	22,800.00
Accumulated Depreciation - Equipment	(380.00)
Total Property, Plant & Equipment		22,420.00
Total Assets		81,900.00
Liabilities & Stockholders' Equity
Liabilities
Current Liabilities
Accounts Payable		15,400.00
Long-Term Liabilities		-
Total Liabilities		15,400.00
Stockholders' Equity
Common Stock	50,000.00
Retained Earnings	16,500.00
Total Stockholders' Equity		66,500.00
Total Liabilities & Stockholders' Equity		81,900.00