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					6
Notes Payable (short-term)					0
Salaries and Wages Payable					0
Interest Payable					0
Income Taxes Payable					0
Deferred Revenue					0
Common Stock					13
Retained Earnings					3
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 $13 cash on July 1, 2018, signing a six-month note payable.
2. Purchased equipment for $16 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 $47, including $9 on credit and $38 received in cash.
7. Recognized salaries and wages expense on December 7 of $21; 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. 1, 3, 5 and 8. 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.)

Answer 1

Cash
Beginning balance	6	By, equipment	16
To, notes payable	13	By, software	2
To, common stock	6	By, salaries and wages	21
To, revenue	38	By, accounts payable	9
To, accounts receivable	8
To, deferred revenue	2
		Ending Balance	25

Accounts Receivable
Beginning balance	2	By, cash	8
To, revenue	9
		Ending Balance	3

Supplies
Beginning balance	2	Supplies expense	8
To, accounts payable	8
		Ending Balance	2

Equipment
Beginning balance	10
To, cash	16
		Ending Balance	26

Accumulated Depreciation
		Beginning balance	3
		Depreciation expense a/c	3
Ending Balance	6

Software
Beginning balance	8
To, cash	2
		Ending Balance	10

Accumulated Amortisation
		Beginning balance	3
		Amortisation expense a/c	3
Ending Balance	6

Accounts payable
To, cash a/c	9	Beginning balance	6
		By, supplies	8
Ending Balance	5

Note payable
		By, cash	13
Ending Balance	13

Salaries and wages payable
		Salaries and wages expense	4
Ending Balance	4

Interest payable
		Interest expense	1
Ending Balance	1

Income tax payable
		Income tax expense	3
Ending Balance	3

Deferred revenue
		By, cash a/c	2
Ending Balance	2

Common stock
		Beginning balance	13
		By, cash	6
Ending Balance	19

Retained Earning
		Beginning balance	3
Ending Balance	3

Service Revenue
		By, cash a/c	38
		By, accounts receivable	9
Ending Balance	47

Depreciation expense
Accumulated Depreciation a/c	3
		Ending Balance	3

Amortisation expense
Accumulated Amortisation a/c	3
		Ending Balance	3

Salaries and wages expense
To, cash	21
Salaries and wages payable a/c	4
		Ending Balance	25

Supplies expense
To, supplies	8
		Ending Balance	8

Interest expense
Interest payable a/c	1
		Ending Balance	1

Income tax expense
Income tax payable a/c	3
		Ending Balance	3