Question

Listed below 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; PRINT on one page

Answer 1

(a)

Rock Medical Company
Journal entries for the month of March
Date	Account title	Debit	Credit
Mar.1	Cash	50000
	Common stock		50000
	(Cash invested )
Mar.1	Cash	5000
	Note payable (short term)		5000
	(6% short term note payble taken)
Mar.1	Equipment	22800
	Accounts payable		22800
	(Equipment purchased on account)
Mar.3	Rent expense	1500
	Cash		1500
	(Payment of rent for the month)
Mar.4	Supplies	1165
	Cash		1165
	(Purchase of supplies for cash)
Mar.10	Cash	850
	Service revenue		850
	(Cash received for service performed)
Mar.15	Accounts receivable	11560
	Service revenue		11560
	(Billing for service performed)
Mar.21	Accounts payable	7600
	Cash		7600
	(Payment made on account)
Mar.26	Cash	2600
	Accounts receivable		2600
	(Cash received from customers)
Mar.30	Accounts receivable	6890
	Service revenue		6890
	(Billing for service performed)
Mar.31	Salaries and wages expense	2500
	Office expenses	910
	Cash		3410
Mar.31	Note payable (short term)	5000
	Interest expense	25
	Cash		5025
	(Payment of principal and interest for note payable)
Mar.31	Supplies expense	695
	Supplies		695
	(Medical supplies used during the month)
Mar.31	Depreciation expense	380
	Accumulated depreciation - equipment		380
	(Depreciation on equipment - 5 year life no salvage)
Mar.31	Utilities expense	200
	Accounts payable		200
	(Utilities expense for the month)

(b)

Cash

Accounts receivable

Supplies

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Mar.1

50000

Mar.3

1500

Mar.15

11560

Mar.26

2600

Mar.4

1165

Mar.31

695

Mar.1

5000

Mar.4

1165

Mar.30

6890

End.Bal.

15850

End.Bal.

470

Mar.10

850

Mar.21

7600

Mar.26

2600

Mar.31

3410

18450

18450

1165

1165

Mar.31

5025

Beg.Bal.

15850

Beg.Bal.

470

End Bal.

39750

58450

58450

Beg.Bal.

39750

Acumulated depreciation - equipment

Accounts payable

Date

Debit

Date

Credit

Date

Debit

Date

Credit

End.Bal.

380

Mar.31

380

Mar.21

7600

Mar.1

22800

End Bal.

15400

Mar.31

200

Equipment

380

380

Date

Debit

Date

Credit

Beg.Bal.

380

23000

23000

Mar.1

22800

End.Bal.

22800

Beg.Bal.

15400

22800

22800

Common stock

Note payable

Beg.Bal.

22800

Date

Debit

Date

Credit

Date

Debit

Date

Credit

End.Bal.

50000

Mar.1

50000

Note payable (short term)

50000

50000

Date

Debit

Date

Credit

Beg.Bal.

50000

Office expense

Mar.31

5000

Mar.1

5000

Date

Debit

Date

Credit

5000

5000

Mar.31

910

Mar.31

910

0

Service revenue

Date

Debit

Date

Credit

Rent expense

Depreciation expense

Mar.10

850

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Mar.15

11560

Mar.3

1500

Mar.31

Mar.31

380

Mar.31

Mar.30

6890

1500

0

380

0

0

19300

Salaries and wages expense

Supplies expense

Interest expense

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Mar.31

2500

Mar.31

Mar.31

695

Mar.31

Mar.31

25

Mar.31

Utility expense

Income summary

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Mar.31

200

Mar.31

(c)

Rock Medical Company
Trial balance as at March 31
Account	Transactions		Unadjusted
	Debit	Credit	Debit	Credit
Cash	58450	18700	39750
Accounts receivable	18450	2600	15850
Supplies	1165	695	470
Equipment	22800		22800
Acumulated depreciation - equipment		380		380
Accounts payable	7600	23000		15400
Note payable (Short term)	5000	5000		0
Common stock		50000		50000
Note payable				0
Service revenue		19300		19300
Rent expense	1500		1500
Office expense	910		910
Salaries and wages expense	2500		2500
Supplies expense	695		695
Depreciation expense	380		380
Interest expense	25		25
Utility expense	200		200
T O T A L	119675	119675	85080	85080

(d)

Rock Medical Company
Income statement
for the month ending March 31
Service revenue	19300
Expenses:
Rent expense	1500
Office expense	910
Salaries and wages expense	2500
Supplies expense	695
Depreciation expense	380
Interest expense	25
Utility expense	200
Total expenses	6210
Net income	13090
Rock Medical Company
Statement of retained earnings
for the month ending March 31
Beginning balance	0
Net income for the month	13090
Ending balance	13090
Rock Medical Company
Balance sheet
as at March 31
Assets
Cash	39750
Accounts receivable	15850
Supplies	470
Equipment	22800
Accumulated depreciation	-380
Total assets	78490
Liabilities and equity
Accounts payable	15400
Common stock	50000
Retained earnings	13090
Total liabilities and equity	78490

(e)

Date	Account title	Debit	Credit
Mar.31	Service revenue	19300
	Rent expense		1500
	Office expense		910
	Depreciation expense		380
	Salaries and wages expense		2500
	Supplies expense		695
	Interest expense		25
	Utility expense		200
	Income summary		13090
	(Closing entry for the month )

Service revenue

Rent expense

Depreciation expense

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Mar.31

19300

Mar.10

850

Mar.3

1500

Mar.31

1500

Mar.31

380

Mar.31

380

Mar.15

11560

Mar.30

6890

1500

1500

380

380

19300

19300

Salaries and wages expense

Supplies expense

Interest expense

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Mar.31

2500

Mar.31

2500

Mar.31

695

Mar.31

695

Mar.31

25

Mar.31

25

2500

2500

695

695

25

25

Utility expense

Office expense

Income summary

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Mar.31

200

Mar.31

200

Mar.31

910

Mar.31

910

Mar.31

910

Mar.31

19300

Mar.31

1500

200

200

910

910

Mar.31

380

Mar.31

2500

Mar.31

695

Mar.31

25

Mar.31

200

End.Bal.

13090

19300

19300

(f)

Rock Medical Company
Trial balance as at March 31
Account	Post Closing
	Debit	Credit
Cash	39750
Accounts receivable	15850
Supplies	470
Equipment	22800
Acumulated depreciation - equipment		380
Accounts payable		15400
Note payable (Short term)		0
Common stock		50000
Retained earnings		13090
Note payable		0
Service revenue
Rent expense
Office expense
Salaries and wages expense
Supplies expense
Depreciation expense
Interest expense
Utility expense
T O T A L	78870	78870