Financial Statements San Mateo Health Care Inc. is owned and operated by Rachel Fields, the sole stockholder. During January 20Y6, San Mateo Health Care entered into the following transactions: Jan. 1 Received $27,000 from Hillard Company as rent for the use of a vacant office in San Mateo Health Care’s building. Hillard paid the rent nine months in advance. 1 Paid $6,000 for a one-year general insurance business policy. 6 Purchased supplies of $1,800 on account. 9 Collected $32,000 for services provided to customers on account. 11 Paid creditors $5,000 on account. 18 Invested an additional $10,000 in the business in exchange for common stock. 20 Billed patients $52,000 for services provided on account. 25 Received $15,000 for services provided to customers who paid cash. 30 Paid expenses as follows: wages, $31,000; utilities, $8,500; rent on medical equipment, $5,300; interest, $200; and miscellaneous, $3,000. 30 Paid dividends of $8,000 to stockholder (Dr. Fields). Adjustment data for San Mateo Health Care Inc. for January are as follows: Insurance expired, $900. Supplies on hand on January 31, $1,200. Depreciation on building, $2,300. Unearned rent revenue earned, $3,000. Wages owed employees but not paid, $2,900. Services provided but not billed to patients, $5,000. Presented in the integrated financial statement format are after-adjustment balances for January. Instructions: Prepare an income statement for January. San Mateo Health Care Inc. Income Statement For the Month Ended January 31, 20Y6 Fees earned $ Operating expenses: Wages expense $ Utilities expense Rent expense Depreciation expense Supplies expense Insurance expense Interest expense Miscellaneous expense Total operating expenses Operating income $ Other income: Rent revenue Net income $ Feedback An income statement lists revenues and expenses. When revenues are more than the expenses, the difference is net income. Prepare a statement of stockholders’ equity for January. For those boxes in which no entry is required, leave the box blank. San Mateo Health Care Inc. Statement of Stockholders’ Equity For the Month Ended January 31, 20Y6 Common Stock Retained Earnings Total Bal. Jan. 1 $ $ $ Issued common stock Net income Dividends Bal. Jan. 31 $ $ $ Feedback In the statement of stockholders’ equity, the balance of retained earnings is determined by using the equation:Beginning Retained Earnings + Net Income – Dividends = Ending Retained EarningsThe balance of common stock is added to the balance of retained earnings to determine the total balance of stockholders’ equity. Prepare a classified balance sheet for January. The note payable is due in ten years. San Mateo Health Care Inc. Balance Sheet January 31, 20Y6 Assets Current assets: Cash $ Accounts receivable Prepaid insurance Supplies Total current assets $ Property, plant, and equipment: Building $ Less accumulated depreciation $ Land Total property, plant, and equipment Total assets $ Liabilities Current liabilities: Accounts payable $ Unearned rent Wages payable Total current liabilities $ Long-term liabilities: Notes payable (due in ten years) Total liabilities $ Stockholders' Equity Common stock $ Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Financial Statements
San Mateo Health Care Inc. is owned and operated by Rachel Fields, the sole stockholder.
During January 20Y6, San Mateo Health Care entered into the following transactions:
| Jan. 1 | Received $27,000 from Hillard Company as rent for the use of a vacant office in San Mateo Health Care’s building. Hillard paid the rent nine months in advance. | ||
| 1 | Paid $6,000 for a one-year general insurance business policy. | ||
| 6 | Purchased supplies of $1,800 on account. | ||
| 9 | Collected $32,000 for services provided to customers on account. | ||
| 11 | Paid creditors $5,000 on account. | ||
| 18 | Invested an additional $10,000 in the business in exchange for common stock. | ||
| 20 | Billed patients $52,000 for services provided on account. | ||
| 25 | Received $15,000 for services provided to customers who paid cash. | ||
| 30 | Paid expenses as follows: wages, $31,000; utilities, $8,500; rent on medical equipment, $5,300; interest, $200; and miscellaneous, $3,000. | ||
| 30 | Paid dividends of $8,000 to stockholder (Dr. Fields). |
Adjustment data for San Mateo Health Care Inc. for January are as follows:
- Insurance expired, $900.
- Supplies on hand on January 31, $1,200.
Depreciation on building, $2,300.- Unearned rent revenue earned, $3,000.
- Wages owed employees but not paid, $2,900.
- Services provided but not billed to patients, $5,000.
Presented in the integrated financial statement format are after-adjustment balances for January.
Instructions:
Prepare an income statement for January.
| San Mateo Health Care Inc. | ||
| Income Statement | ||
| For the Month Ended January 31, 20Y6 | ||
| Fees earned | $ | |
| Operating expenses: | ||
| Wages expense | $ | |
| Utilities expense | ||
| Rent expense | ||
| Depreciation expense | ||
| Supplies expense | ||
| Insurance expense | ||
| Interest expense | ||
| Miscellaneous expense | ||
| Total operating expenses | ||
| Operating income | $ | |
| Other income: | ||
| Rent revenue | ||
| Net income | $ |
An income statement lists revenues and expenses. When revenues are more than the expenses, the difference is net income.
Prepare a statement of
| San Mateo Health Care Inc. | |||
| Statement of Stockholders’ Equity | |||
| For the Month Ended January 31, 20Y6 | |||
| Common Stock | Total | ||
| Bal. Jan. 1 | $ | $ | $ |
| Issued common stock | |||
| Net income | |||
| Dividends | |||
| Bal. Jan. 31 | $ | $ | $ |
In the statement of stockholders’ equity, the balance of retained earnings is determined by using the equation:
Beginning Retained Earnings + Net Income – Dividends = Ending Retained Earnings
The balance of common stock is added to the balance of retained earnings to determine the total balance of stockholders’ equity.
Prepare a classified
| San Mateo Health Care Inc. | |||
| Balance Sheet | |||
| January 31, 20Y6 | |||
| Assets | |||
| Current assets: | |||
| Cash | $ | ||
| Prepaid insurance | |||
| Supplies | |||
| Total current assets | $ | ||
| Property, plant, and equipment: | |||
| Building | $ | ||
| Less |
$ | ||
| Land | |||
| Total property, plant, and equipment | |||
| Total assets | $ | ||
| Liabilities | |||
| Current liabilities: | |||
| Accounts payable | $ | ||
| Unearned rent | |||
| Wages payable | |||
| Total current liabilities | $ | ||
| Long-term liabilities: | |||
| Notes payable (due in ten years) | |||
| Total liabilities | $ | ||
| Stockholders' Equity | |||
| Common stock | $ | ||
| Retained earnings | |||
| Total stockholders' equity | |||
| Total liabilities and stockholders' equity | $ |
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