Adjusting Entries E3-6 ( the first month of operations the following transaction

Question

Adjusting Entries E3-6 ( the first month of operations the following transactions occurred. Adjusting Entries) Stephen King, D.D.S, opened a dental practice on January 1, 2010. During 1. Performed services for patients who had dental plan insurance. At January 31, $750 of such ser- vices was earned but not yet billed to the insurance companies. 2. Utility expenses incurred but not paid prior to January 31 totaled $520. 3. Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a $60,000, 3-year note payable. The equipment depreciates $400 per month. Interest is $500 per month. 4. Purchased a one-year malpractice insurance policy on January 1 for $15,000. . Purchased $1,600 of dental supplies. On January 31, determined that $400 of supplies were on hand. Instructions Prepare the adjusting entries on January 31. (Omit explanations.) Account titles are: Accumulated Depreciation-Dental Equipment; Depreciation Expense; Service Revenue; Accounts Receivable; Insur- ance Expense; Interest Expense; Interest Payable; Prepaid Insurance; Supplies; Supplies Expense; Utili- ties Expense; and Utilities Payable.

Explanation / Answer

Journal entry :

Date account and explanation debit credit Jan 31 Account receivable 750 Service revenue 750 (To record revenue earned) Jan 31 Utilities expense 520 Utilities payable 520 (To record expense incurred) Jan 31 Depreciation expense 400 Accumlated depreciation-Dental equipment 400 (To record depreciation) Jan 31 Interest expense 500 Interest payable 500 (To record interest) Jan 31 Insurance expense (15000/12) 1250 Prepaid insurance 1250 (To record insurance expense) Jan 31 Supplies expense (1600-400) 1200 Supplies 1200 (To record supplies expense)

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