William Beard opens a medical practice titled William Beard, Professional Corp. He experienced the following events:

Oct. 6: Beard invested $40,000 in the business, which in turn issued its common stock to him.

Oct.9: The business paid cash for land costing $30,000. Beard plans to build an office building on the land.

Oct. 12: The business purchased medical supplies for $2,000 on account.

Oct.15: Company officially opened for business.

Oct.15-31: During the rest of the month, Beard treated patients and earned service revenue of $8,000, receiving cash for half the revenue earned.

Oct.15-31: The business paid cash expenses: employee salaries, $1,400; office rent, $1,000; utilities, $300.

Oct.31: The business sold supplies to another physician for cost of $500.

Oct.31: The business borrowed $10,000, signing a note payable to the bank.

Oct.31: The business paid $1,500 on account.



1) How much are the total assets?
2) How much does the business expect to collect from patients?
3) How much does the business owe in total?
4) How much of the business's assets does Beard really own?
5) How much net income or net loss did the business experience during its first month of operations?


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I can't seem to balance the Assets and Liabilities/Equity. I seriously can't figure out what I'm doing wrong... :confused:

I did get number 1. I got $55,800. I can't get the other side to equal that. And I used all the numbers correctly...

I think #2 is $8,000 (from looking at the Accounts Receivable column).

I think #3 is $12,000 (adding the payables together).

#4 is $45,300 (equity).

#5 is $5,300 (net income formula).


I really REALLY appreciate the help.

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No takers?? So I guess I'm not the only one who doesn't get it. That makes me feel better. I noticed I got a good rating... but I'd still like some help though........ *echo*

What is the definition for trial balance?

Kelly,


Oct. 6: Beard invested $40,000 in the business, which in turn issued its common stock to him.

Dr. Cash 40,000
Cr. Common Stock 40,000

Running Balance:
B/S
Cash 40,000
Common Stock 40,000


Oct.9: The business paid cash for land costing $30,000. Beard plans to build an office building on the land.

Dr. Land 30,000
Cr. Cash 30,000

Running Balance:
B/S
Cash 10,000
Land 30,000
Common Stock 40,000


Oct. 12: The business purchased medical supplies for $2,000 on account.

Dr. Medical Supplies 2,000
Cr. AP 2,000

Running Balance:
B/S
Cash 10,000
Medical Supplies 2,000
Land 30,000
AP 2,000
Common Stock 40,000


Oct.15: Company officially opened for business.

No Journal Entry required.


Oct.15-31: During the rest of the month, Beard treated patients and earned service revenue of $8,000, receiving cash for half the revenue earned.

Dr. Cash 4,000
Dr. AR 4,000
Cr. Revenue 8,000

Running Balance:
B/S
Cash 14,000
A/R 4,000
Medical Supplies 2,000
Land 30,000
AP 2,000
Common Stock 40,000

I/S
Revenue 8,000


Oct.15-31: The business paid cash expenses: employee salaries, $1,400; office rent, $1,000; utilities, $300.

Dr. Employee Salaries Expense 1,400
Dr. Rent Expense 1,000
Dr. Utilities Expense 300
Cr. Cash 2,700

Running Balance:
B/S
Cash 11,300
A/R 4,000
Medical Supplies 2,000
Land 30,000
AP 2,000
Common Stock 40,000

I/S
Revenue 8,000
Employee Salaries Expense 1,400
Rent Expense 1,000
Utilities Expense 300


Oct.31: The business sold supplies to another physician for cost of $500.

Dr. Cash 500
Cr. Supplies 500

Running Balance:
B/S
Cash 11,800
A/R 4,000
Medical Supplies 1,500
Land 30,000
AP 2,000
Common Stock 40,000

I/S
Revenue 8,000
Employee Salaries Expense 1,400
Rent Expense 1,000
Utilities Expense 300


Oct.31: The business borrowed $10,000, signing a note payable to the bank.

Dr. Cash 10,000
Cr. Bank Loan 10,000

Running Balance:
B/S
Cash 21,800
A/R 4,000
Medical Supplies 1,500
Land 30,000
AP 2,000
Bank Loan 10,000
Common Stock 40,000

I/S
Revenue 8,000
Employee Salaries Expense 1,400
Rent Expense 1,000
Utilities Expense 300


Oct.31: The business paid $1,500 on account.

Dr. AP 1,500
Cr. Cash 1,500

Running Balance:
B/S
Cash 20,300
A/R 4,000
Medical Supplies 1,500
Land 30,000
AP 500
Bank Loan 10,000
Common Stock 40,000

I/S
Revenue 8,000
Employee Salaries Expense 1,400
Rent Expense 1,000
Utilities Expense 300


QUESTION
How much supplies do you have on hand at year end?

You bought $2,000 and sold $500 to another physician, but did you not use some up while earning the $8,000 in revenue?

I will assume you didn’t, since you didn’t mention it.


FINAL BALANCES
B/S
Cash 20,300
A/R 4,000
Medical Supplies 1,500
Land 30,000
TOTAL ASSETS = 55,800

AP 500
Bank Loan 10,000
Common Stock 40,000

I/S
Revenue 8,000
Employee Salaries Expense 1,400
Rent Expense 1,000
Utilities Expense 300


1) How much are the total assets?

Cash 20,300
A/R 4,000
Medical Supplies 1,500
Land 30,000
TOTAL ASSETS = 55,800


2) How much does the business expect to collect from patients?

A/R 4,000


3) How much does the business owe in total?

AP 500
Bank Loan 10,000

Owes a total of $10,500


4) How much of the business's assets does Beard really own?

I take it to mean how much in equity is there?

TOTAL ASSETS = 55,800

TOTAL LIABILITIES = 10,500

TOTAL EQUITY = $45,300


5) How much net income or net loss did the business experience during its first month of operations?

I/S
Revenue 8,000

Employee Salaries Expense 1,400
Rent Expense 1,000
Utilities Expense 300
TOTAL EXPENSES 2,700

NET INCOME = $5,300

what is the definition for trial balance?

muralitharan,

A trial balance is simply making sure that all of your debits equal all of your credits.

It includes all accounts from both your balance sheet and income statement.

If you have done all your Journal Entries correctly your trial balance should balance.