Details

Analyze the effects of these events on the accounting equation of the medical practice of Caren Smith, M.D.

Use a format similar to that of Exhibit 1-6, with headings for Cash; Medical supplies; Land; Accounts payable;

and Smith, capital.

1. Analyze the effects of Draper Consulting transactions on the accounting equation. Use the format of Exhibit 1-6, and include these headings: Cash; Accounts receivable; Supplies; Equipment; Furniture; Accounts payable; and Draper, capital.

2. Prepare the income statement of Draper Consulting for the month ended December 31, 2012.

3. Prepare the statement of owner’s equity for the month ended December 31, 2012.

4. Prepare the balance sheet at December 31, 2012.

P2-30A           Journalizing transactions, posting to T-accounts, and preparing a trial balance [45–60 min]

Doris Stewart started her practice as a design consultant on September 1, 2012. During the first month of operations, the business completed the following transactions:

Sep

1    Received $42,000 cash and gave capital to Stewart.

4 Purchased supplies, $700, and furniture, $1,900, on account.

6 Performed services for a law firm and received $1,400 cash.

7 Paid $24,000 cash to acquire land for a future office site.

10 Performed service for a hotel and received its promise to pay the $1,000 within one week.

14 Paid for the furniture purchased September 4 on account.

15 Paid secretary’s bi-monthly salary, $490.

17 Received cash on account, $400.

20 Prepared a design for a school on account, $700.

28 Received $2,100 cash for consulting with Plummer & Gorden.

30 Paid secretary’s bi-monthly salary, $490.

30 Paid rent expense, $650.

30 Stewart withdrew cash of $3,000.

Requirements

1. Open the following T-accounts: Cash; Accounts receivable; Supplies; Furniture; Land; Accounts payable; Stewart, capital; Stewart, drawing; Service revenue; Salary expense; and Rent expense.

2. Record each transaction in the journal, using the account titles given. Key each transaction by date. Explanations are not required.

3. Post the transactions to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal, as shown in the chapter.

4. Prepare the trial balance of Doris Stewart, Designer, at September 30, 2012.