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P2-34A Preparing financial statements from the trial balance and calculating the debt ratio
Learning Objectives 4, 5
2. Ending Retained Earnings $11,788
The trial balance as of July 31, 2018, for Sara Simon, Registered Dietician, is presented below:
Requirements
1. Prepare the income statement for the month ended July 31, 2018.
2. Prepare the statement of retained earnings for the month ended July 31, 2018. The beginning
balance of retained earnings was $0.
3. Prepare the balance sheet as of July 31, 2018.
4. Calculate the debt ratio as of July 31, 2018.
SOLUTION
Requirement 1
Problems (Group B)
P2-35B Journalizing transactions, posting journal entries to T-accounts, and preparing a
trial balance
Learning Objectives 3, 4
2. Cash Balance $69,680
Victor Yang practices medicine under the business title Victor Yang, M.D. During March, the
medical practice completed the following transactions:
Mar. 1 Yang contributed $62,000 cash to the business in exchange for common stock.
5 Paid monthly rent on medical equipment, $570.
9 Paid $14,000 cash to purchase land to be used in operations.
10 Purchased office supplies on account, $1,500.
19 Borrowed $27,000 from the bank for business use.
22 Paid $1,400 on account.
28 The business received a bill for advertising in the daily newspaper to be paid in April, $220.
31 Revenues earned during the month included $6,700 cash and $5,800 on account.
31 Paid employees’ salaries $2,100, office rent $1,500, and utilities $350. Record as a compound entry.
31 The business received $1,000 for medical screening services to be performed next month.
31 Paid cash dividends of $7,100.
The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Land;
Accounts Payable; Advertising Payable; Unearned Revenue; Notes Payable; Common Stock;
Dividends; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; and
Advertising Expense.
Requirements
1. Journalize each transaction. Explanations are not required.
2. Post the journal entries to the T-accounts, using transaction dates as posting references in the
ledger accounts. Label the balance of each account Bal.
3. Prepare the trial balance of Victor Yang, M.D., as of March 31, 2018.
SOLUTION
P2-35B, cont.
P2-36B Journalizing transactions, posting journal entries to T-accounts, and preparing a
trial balance
Learning Objectives 3, 4
4. Total Debits $51,430
Beth Stewart started her practice as a design consultant on November 1, 2018. During the first
month of operations, the business completed the following transactions:
Nov. 1 Received $41,000 cash and issued common stock to Stewart.
4 Purchased office supplies, $1,200, and furniture, $2,300, on account.
6 Performed services for a law firm and received $2,100 cash.
7 Paid $27,000 cash to acquire land to be used in operations.
10 Performed services for a hotel and received its promise to pay the $800 within one week.
14 Paid for the furniture purchased on November 4 on account.
15 Paid assistant’s semimonthly salary, $1,470.
17 Received cash on account, $500.
20 Prepared a design for a school on account, $680.
25 Received $1,900 cash for design services to be performed in December.
28 Received $3,100 cash for consulting with Plummer & Gordon.
29 Paid $840 cash for a 12-month insurance policy starting on December 1.
30 Paid assistant’s semimonthly salary, $1,470.
30 Paid monthly rent expense, $650.
30 Received a bill for utilities, $650. The bill will be paid next month.
30 Paid cash dividends of $2,800.
Requirements
1. Record each transaction in the journal using the following account titles: Cash; Accounts
Receivable; Office Supplies; Prepaid Insurance; Land; Furniture; Accounts Payable; Utilities
Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Salaries
Expense; Rent Expense; and Utilities Expense. Explanations are not required.
2. Open a T-account for each of the accounts.
3. Post the journal entries to the T-accounts, using transaction dates as posting references in the
ledger accounts. Label the balance of each account Bal.
4. Prepare the trial balance of Beth Stewart, Designer, as of November 30, 2018.
SOLUTION
