Building upon the results of Exercise 2-16A, Show the impact of business transac
ID: 2445950 • Letter: B
Question
Building upon the results of Exercise 2-16A, Show the impact of business transactions on the accounting equation.
. Effects of above events on the accounting equation of the medical practice of Bob Morin are as follows:
Bob Morin, P.C.
Journal Entries
Date Particulars Dr. (in $) Cr. (in $)
Aug 9 Cash Account Dr. 39000
To Capital Account 39000
(Being capital introduced to business)
Aug 9 Land Account Dr. 29000
To Cash Account 29000
(Being land purchased for cash)
Aug 12 Medical Supplies Account Dr. 1700
To Creditor 1700
(Being Medical Supplies purchased on credit)
Aug 15-31 Cash Account Dr. 3800
Debtors Account Dr. 3800
To Revenue from Services 7600
Aug 31 Salary Expenses Dr. 1300
Rent Expenses Dr. 700
Utilities Expenses Dr. 500
To Cash Account 2500
(Being Expenses paid in cash)
Aug 31 Cash Account Dr. 700
To Medical Supplies Account 700
(Being Medical Supplies sold another surgeon)
Aug 31 Cash Account Dr. 12000
To Bank Loan Account 12000
(Being money Borrowed from Bank)
Aug 31 Creditor Account Dr. 800
To Cash Account 800
(Being cash paid to creditors)
2. a. Total Asset of Business are:
Land 29000
Medical Supplies 1000
Debtors 3800
Cash 23200
Total Assets $57000
b. Business expect to collect from patients : $3800
c. Business Owings : $12000
d. Business Asset that really Morin Own : $ 45000
e. Net Income of business during its first month of operations :
Revenue from Service Rendered 7600
Less: Expenses 2500
Net Income $5100
Explanation / Answer
Assets Liabilities Cash Land Accts. Rec. Supplies Accts Pay Notes Pay Common Stock Retained Earnings 39000 39000 -29000 29000 1700 1700 3800 3800 7600 -1300 -1300 -700 -700 -500 -500 700 -700 12000 12000 -800 -800 23200 29000 3800 1000 900 12000 39000 5100
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