College Accounting (Book Only): A Career Approach
College Accounting (Book Only): A Career Approach
13th Edition
ISBN: 9781337280570
Author: Scott, Cathy J.
Publisher: South-Western College Pub
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Chapter 2, Problem 3PA

S. Myers, a speech therapist, opened a clinic in the name of Myers Clinic. Her accountant prepared the following chart of accounts:

Chapter 2, Problem 3PA, S. Myers, a speech therapist, opened a clinic in the name of Myers Clinic. Her accountant prepared

The following transactions occurred during June of this year:

  1. a. Myers deposited $40,000 in a bank account in the name of the business.
  2. b. Bought waiting room chairs and tables on account, $1,330.
  3. c. Bought a fax/copier/scanner combination from Max’s Equipment for $595, paying $200 in cash and placing the balance on account, Ck. No. 1001.
  4. d. Bought an intercom system on account from Regan Office Supply, $375.
  5. e. Received and paid the telephone bill, $155, Ck. No. 1002.
  6. f. Sold professional services on account, $1,484.
  7. g. Received and paid the electric bill, $190, Ck. No. 1003.
  8. h. Received and paid the bill for the state speech therapy convention, $450, Ck. No. 1004.
  9. i. Sold professional services for cash, $2,575.
  10. j. Paid on account to Regan Office Supply, $300, Ck. No. 1005.
  11. k. Paid the rent for the current month, $940, Ck. No. 1006.
  12. l. Paid salary of the receptionist, $880, Ck. No. 1007.
  13. m. Myers withdrew cash for personal use, $800, Ck. No. 1008.
  14. n. Received $885 on account from patients who were previously billed.

Required

  1. 1. Record the owner’s name in the Capital and Drawing T accounts.
  2. 2. Correctly place the plus and minus signs for each T account and label the debit and credit sides of the accounts.
  3. 3. Record the transactions in the T accounts. Write the letter of each entry to identify the transaction.
  4. 4. Foot the T accounts and show the balances.
  5. 5. Prepare a trial balance as of June 30, 20--.
  6. 6. Prepare an income statement for June 30, 20--.
  7. 7. Prepare a statement of owner’s equity for June 30, 20--.
  8. 8. Prepare a balance sheet as of June 30, 20--.
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Tower Company owned a service truck that was purchased at the beginning of Year 1 for $48,000. It had an estimated life of three years and an estimated salvage value of $3,000. Tower company uses straight-line depreciation. Its financial condition as of January 1, Year 3, is shown on the first line of the horizontal statements model. In Year 3, Tower Company spent the following amounts on the truck: January 4 Overhauled the engine for $7,600. The estimated life was extended one additional year, and the salvage value was revised to $2,000. July 6 Obtained oil change and transmission service, $410. August 7 Replaced the fan belt and battery, $510. December 31 Purchased gasoline for the year, $9,100. December 31 Recognized Year 3 depreciation expense. Required Record the Year 3 transactions in a statements model. Note: In the Statement of Cash Flows column, use the initials OA for operating activities, FA for financing activities, or IA for investing activity. Enter any decreases to…

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