Here are the transactions of Rock Medical Company a service

Here 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

Solution

Answer a. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1-Mar Cash    50,000.00 Common Stock    50,000.00 (record the issue of Common Stock) 1-Mar Cash      5,000.00 Notes Payable (Short Term)      5,000.00 (record the loan taken on short term) 1-Mar Equipment    22,800.00 Accounts Payable    22,800.00 (Record the purchase of Medical Equip.) 3-Mar Rent Expenses      1,500.00 Cash      1,500.00 (record the rent paid) 3-Mar No Journal Entry for employ of receptionist 4-Mar Supplies      1,165.00 Cash      1,165.00 (record the purchase of medical supplies) 10-Mar Cash          850.00 Service Revenue          850.00 (Record the service revenue) 15-Mar Accounts Receivable    11,560.00 Service Revenue    11,560.00 (Record the service revenue) 21-Mar Accounts Payable      7,600.00 Cash      7,600.00 (Record the payment made to JK Entt.) 26-Mar Cash      2,600.00 Accounts Receivable      2,600.00 (record the cash recd from patients) 30-Mar Accounts Receivable      6,890.00 Service Revenue      6,890.00 (Record the service revenue) 31-Mar Notes Payable (Short Term)      5,000.00 Interest Expense            25.00 Cash      5,025.00 (Record the note paid) 31-Mar Supplies Expenses          695.00 Supplies          695.00 (record the supplies used) 31-Mar Depreciation Expense          380.00 Accumulated Depreciation - Equipment          380.00 (Record the dep. Expense). Dep. Exp = $22,800 /5 Years X (1/12) = $380 31-Mar Utility Expenses          200.00 Accounts Payable          200.00 (record the utility expenses) Answer b. Cash Accounts Receivable Supplies Beg. Bal.                     -          1,500.00 3-Mar Beg. Bal.                     -        2,600.00 26-Mar Beg. Bal.                   -              695.00 31-Mar 1-Mar      50,000.00        1,165.00 4-Mar 15-Mar      11,560.00 4-Mar      1,165.00 1-Mar        5,000.00        7,600.00 21-Mar 30-Mar        6,890.00 10-Mar            850.00        5,025.00 31-Mar 26-Mar        2,600.00 End. Bal.      43,160.00 End. Bal.      15,850.00 End. Bal.          470.00 Equipment Common Stock Notes Payable (Short Term) Beg. Bal.                     -   Beg. Bal.                   -   Beg. Bal.                     -   1-Mar      22,800.00    50,000.00 1-Mar 31-Mar      5,000.00        5,000.00 1-Mar End. Bal.      22,800.00 End. Bal.    50,000.00 End. Bal.                     -   Accounts Payable Service Revenue Rent Expense Beg. Bal.                     -   Beg. Bal.                   -   Beg. Bal.                   -   21-Mar        7,600.00      22,800.00 1-Mar          850.00 10-Mar 3-Mar      1,500.00            200.00 31-Mar    11,560.00 15-Mar      6,890.00 30-Mar End. Bal.      15,400.00 End. Bal.    19,300.00 End. Bal.      1,500.00 Interest Expense Supllies Expense Accumulated Depreciation - Equipment 31-Mar              25.00 31-Mar            695.00            380.00 31-Mar End. Bal.              25.00 End. Bal.            695.00 End. Bal.            380.00 Depreciation Expense Utility Expense 31-Mar            380.00 31-Mar            200.00 End. Bal.            380.00 End. Bal.            200.00 Answer c. Trial Balance Accounts Title Debits Credits Cash      43,160.00 Accounts Receivable      15,850.00 Supplies            470.00 Equipment      22,800.00 Accumulated Depreciation - Equipment            380.00 Common Stock      50,000.00 Notes Payable (Short Term)                     -   Accounts Payable      15,400.00 Service Revenue      19,300.00 Rent Expense        1,500.00 Interest Expense              25.00 Supllies Expense            695.00 Depreciation Expense            380.00 Utility Expense            200.00 Total      85,080.00      85,080.00                     -   Answer d. Rock Medical Company Income Statement Month Ended Mar 31 Revenues: Service Revenue      19,300.00 Expenses Rent Expense        1,500.00 Interest Expense              25.00 Supllies Expense            695.00 Depreciation Expense            380.00 Utility Expense            200.00 Total Expenses        2,800.00 Net Income (Loss)      16,500.00 Rock Medical Company Statement of Retained Earnings Month Ended Mar 31 Retained Earnings - Mar 1                     -   Net Income (Loss)      16,500.00 Retained Earnings - June 30, 2018      16,500.00 Rock Medical Company Balance Sheet Mar 31 Assets Current Assets Cash      43,160.00 Accounts Receivable      15,850.00 Supplies            470.00 Total Current Assets      59,480.00 Property, Plant & Equipment Equipment      22,800.00 Accumulated Depreciation - Equipment          (380.00) Total Property, Plant & Equipment      22,420.00 Total Assets      81,900.00 Liabilities & Stockholders\' Equity Liabilities Current Liabilities Accounts Payable      15,400.00 Long-Term Liabilities                     -   Total Liabilities      15,400.00 Stockholders\' Equity Common Stock      50,000.00 Retained Earnings      16,500.00 Total Stockholders\' Equity      66,500.00 Total Liabilities & Stockholders\' Equity      81,900.00