Due September 8, 5 pm
Dr. McStuffins has a medical clinic formed as a corporation that provides specialty care services
to patients. The balances in the accounts as of January 1, 2017 are as follows:
Office Fixtures and Equipment
5,000 Notes Payable
Patient Service Revenue
Income Tax Expense
Below are the business transactions for January:
Purchased Office Fixtures and Equipment for $25,000. The clinic paid $11,000 in cash
and financed the remaining balance with debt by signing a note promising to pay in three
years. Ignore interest.
Received $31,000 of cash from an investor in exchange for 2,500 shares of stock in the
Purchased office supplies expected to last several months for $6,000.
Received $13,900 from customers on previously billed medical services (i.e., medical
services provided in 2016).
Paid suppliers $6,000 included in accounts payable.
Purchased medical instruments for $8,500 in cash.
Billed clients $108,700 for services rendered. Of this amount, $40,000 was received in
cash, and the balance was billed on account (due in 30 days).
Paid $3,700 in income taxes for taxes incurred during January.
Received a $6,400 invoice for insurance coverage in January. The entire amount is due to
be paid on February 16. You can consider this an accounts payable.
Paid employees $42,800 in salaries for work done during the month of January.
Paid Light Co. $2,000 for utilities used in the clinic during the month of January.
Submit all your answers to D2L in one Excel document.
1. Prepare journal entries for each transaction (list the date, accounts and amounts debited
and credited in good form). Do not worry about making adjusting journal entries.
2. Create a T- account for each account used with the beginning balance provided. Post
each transaction from Question 1 to the appropriate T account and determine the ending
balance as of January 31.
3. Prepare a trial balance dated January 31, 2017 (see page 125 in the textbook). By
referring to cells in your T-accounts bring over the balances from your T-accounts to
the trial balance. Use the “Sum” function in Excel to add up your debit and credit
4. Copying the appropriate amounts from the trial balance, prepare a classified income
statement for the month ended January 31, 2017 (see page 126 in the textbook). Does
January appear to be a profitable month for Dr. McStuffins? Explain your answer in
two full sentences. You can ignore the fact that you have not made any adjusting
5. Copying the appropriate amounts from the trial balance, prepare a balance sheet as of
January 31, 2017. Use the “Sum” function in Excel for your totals and a formula to
calculate ending retained earnings. (Remember: Ending Retained Earnings =
Beginning Retained Earnings + Net Income – Dividends)
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