E2-20A
Dr. Ava Cohen opened a medical practice specializing in physical therapy. During the first month of operation (October), the business, titled Dr. Ava Cohen, Professional Corporation (P.C.), experienced the following events:

Oct 6 Cohen invested $145,000 in the business, which in turn issued its common stock to her.
9 The business paid cash for land costing $56,000. Cohen plans to build an office building on the land.
12 The business purchased medical supplies for $1,800 on account.
15 Dr. Ava Cohen , P.C., officially opened for business.
15-31 During the rest of the month, Cohen treated patients and earned service revenue of $9,000, receiving cash for half the revenue earned.
15-31 The business paid cash expenses: employee salaries, $2,400; office rent, $900; utilities, $1,600
31 The business sold supplies to another physician for cost of $900 and received cash.
31 The business borrowed $30,000 , signing a note payable to the bank.
31 The business paid $600 on account.

Requirement

1. Record the transactions in the journal of Dr. Ava Cohen, P.C. List the transactions by date and give an explanation for each transaction.
(Record debits first, then credits. Select explanations on the last line of the journal entry table. If an entry is not required,
select “No entry required” on the first line of the table and leave all other cells blank.)

Oct 6: Cohen invested $145,000 in the business, which in turn issued its common stock to her.

Oct 9: The business paid cash for land costing $56,000. Cohen plans to build an office building on the land.

Oct 12: The business purchased medical supplies for $1,800 on account.

Oct 15: Dr. Ava Cohen, P.C., officially opened for business.

Oct15-31: During the rest of the month, Cohen treated patients and earned service revenue of $9,000,
receiving cash for half the revenue earned. (Record this transaction as occurring on the last day of the month.)

Oct 15-31: The business paid cash expenses: employee salaries, $2,400; office rent, $900; utilities, $1,600.
(Record this transaction as occurring on the last day of the month. Prepare a single compound journal entry.)
Oct 31: The business sold supplies to another physician for cost of $900 and received cash.
Oct 31: The business borrowed $30,000, signing a note payable to the bank.

Oct 31: The business paid $600 on account.

E2-21A

Dr. Angela Anderson opened a medical practice specializing in physical therapy. During the first month of operation (August),
the business, titled Dr. Angela Anderson, Professional Corporation (P.C.), experienced the following events:

Aug 6 Anderson invested $140,000 in the business, which in turn issued its common stock to her.
9 The business paid cash for land costing $64,000. Anderson plans to build an office building on the land.
12 The business purchased medical supplies for $1,700 on account.
15 Dr. Angela Anderson , P.C., officially opened for business.
15-31 During the rest of the month, Anderson treated patients and earned service revenue of $9,600 , receiving cash for half the revenue earned.
15-31 The business paid cash expenses: employee salaries,$3,100; office rent, $700; utilities, .$1,800
31 The business sold supplies to another physician for cost of $200 and received cash.
31 The business borrowed $34,000 , signing a note payable to the bank.
31 The business paid $700 on account.

Requirement 1. Post the entries to the ledger, using T-accounts. Key transactions by date. (Record transactions from the 15-31 of the month as occurring on the last day of the month.)
Calculate the balance for each account and enter it on the appropriate side of each T-account.

Requirement 2. Prepare the trial balance of Dr. Angela Anderson, P.C., at August 31, 2016.
Dr. Angela Anderson, P.C.
Trial Balance
August 31, 2016
Account Debit Credit
Cash $108,700
Accounts receivable 4,800
Medical supplies 1,500
Land 64,000
Accounts payable $1,000
Note payable 34,000
Common stock 140,000
Service revenue 9,600
Salary expense 3,100
Rent expense 700
Utilities expense 1,800
Total $184,600 $184,600

Requirement 3. From the trial balance, determine total assets, total liabilities, and total stockholders’ equity on August 31.

E3-22A

Folton Rentals Company faced the following situations.
a. The business has interest expense of $3,900 that it must pay early in January 2017.
b. Interest revenue of $4,700 has been earned but not yet received.
c. On July 1, 2016, when the business collected $14,200 rent in advance, it debited Cash and credited Unearned Rent Revenue. The tenant was paying for two years’ rent.
d. Salary expense is $5,900 per day Monday through Friday and the business pays employees each Friday. For the
purpose of this calculation, assume December 31 falls on a Thursday.
e. The unadjusted balance of the Supplies account is $3,500. The total cost of supplies on hand is $1,100.
f. Equipment was purchased on January 1 of this year at a cost of $60,000. The equipment’s useful life is five years.
There is no residual value. Record depreciation for this year and then determine the equipment’s book value.

Requirement

Journalize the adjusting entry needed at December 31, 2016, for each situation. Consider each fact separately.
(Record debits first, then credits. Exclude explanations from any journal entries.)

a. The business has interest expense of $3,900 that it must pay early in January 2017.

b. Interest revenue of $4,700 has been earned but not yet received.
Journal Entry

c. On July 1, 2016, when the business collected $14,200 rent in advance, it debited Cash and credited Unearned Rent Revenue. The tenant was paying for two years’ rent.

d. Salary expense is $5,900 per day, Monday through Friday, and the business pays employees each Friday. For the purpose of this calculation, assume December 31 falls on a Thursday.

e. The unadjusted balance of the Supplies account is $3,500. The total cost of supplies on hand is $1,100.

f. Equipment was purchased on January 1 of this year at a cost of $60,000. The equipment’s useful life is five years. There is no residual value. Record depreciation for this year and then determine the equipment’s book value.

S3-13

Due to the terms of its lease, Hawk Services, Inc., pays the rent for its new office space in one annual payment of $22,500
on August 1, 2016. The lease covers the period of August 1, 2016, through July 31, 2017. Hawk Services has a year-end of December 31. Assume that Hawk Services had no other prepaid rent transactions, nor did it have a Prepaid Rent beginning balance in 2016. Give the journal entries that Hawk Services would make for (a) the annual rent payment of $22,500 on August 1 and (b) the adjusting entry for rent expense on December 31, 2016. What is the balance of Prepaid Rent at December 31,2016?

Give the journal entries that Hawk Services would make for (a) the annual rent payment of $22,500 on August 1 and (b) the adjusting entry for rent expense on December 31, 2016. What is the balance of Prepaid Rent at December 31, 2016?
(Record debits first, then credits. Exclude explanations from any journal entries.)

Give the journal entry that Hawk Services would make for (a) the annual rent payment of $22,500 on August 1.

Give the journal entry that Hawk Services would make for (b) the adjusting entry for rent expense on December
31, 2016. (Do not round any intermediarycalculations, and round your final answer to the nearest whole dollar.)

What is the balance of Prepaid Rent at December 31, 2016?

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