College of St. Scholastica
Department of Health Informatics and Information Management
TRANSACTION ACCOUNTING ASSIGNMENT
INSTRUCTIONS:
Working independently and using the data and basic templates provided:
a. Prepare journal entries for above transactions. Note:the first two have been done for you.
b. Post journal entries to general ledger accounts (T-accounts)
c. Prepare a trial balance
The following transactions occurred in March, 20xx when Doctors Smith and Jones opened the Lake Superior Ambulatory Care Facility.
1. Each physician contributed $25,000 to the facility; thus beginning balance (BB) in Cash T-Account is $50,000 and in OE T-Account is 50,000
2. The first 2 months rent of $2000 was prepaid for their space (note: prepaid rent is an asset)
3. Inventory of supplies was purchased for $2500 on account with a local office supply vendor
4. They purchased equipment worth $5000, borrowing money from the bank via a short-term note
5. They collected $3,000 in
cash payments
from patients at the time of the visit
6. Patients were billed for $4,000 for services rendered. (note: revenue is earned when services are rendered)
7. While treating patients, $400 of supplies from inventory were used up. (note: when supplies are used they become expenses)
8. $2,500 was received in payment from patient who had been billed
9. The physicians paid $2500 plus $30 interest to the vendor from whom they had previously purchased inventory supplies
10. They paid other expenses of: utilities - $50 and Salaries/wages - $1600
11. The physicians recognized that one month’s prepaid rent had now been used up. (note: 1 month's prepaid rent now becomes an expense)
GENERAL JOURNAL
March 20xx
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Debit
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Credit
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1. Cash
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$25,000
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Cash
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$25,000
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Owner’s Equity
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$50,000
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Physician investment in clinic
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2. Prepaid Rent
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$2,000
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Cash
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$2,000
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$2,000
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Prepaid 2 months rent
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3. Inventory
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$2,500
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Accounts Payable
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$2,500
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Purchase of inventory items
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4.Cash
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$5,000
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Bank Loan Payable
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$5,000
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Short term
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5. Accounts Payable
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$3,000
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Cash
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$5,000
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Cash payments on AP
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6.Accounts Receivable
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$4,000
$2,500
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Patient Services Revenue
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$4,000
$2,500
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Patients billed for services rendered
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7.Operating Expenses
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Salaries and wages
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$1600
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Utilities
Employee Insurance
Repairs
Other
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$50
$400
$2530
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8.
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9.
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10.
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11. Rent Expense
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$1000
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Prepaid Rent
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$1000
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One month rent expensed
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GENERAL LEDGER
March 20xx
Asset T-Accounts
+ Cash -
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+ Prepaid Rent -
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+ Supply Inventory -
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1. 50,000
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2. 2,000
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2. 2,000
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11. 1000
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EB:
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EB:
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EB:
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+ Equipment -
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+ Accounts Receivable -
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EB:
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EB:
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Expense T-Accounts
+ Supply -
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+ Interest -
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+ Utilities -
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EB:
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EB:
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EB:
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+ Salary & Wages -
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+ Rent -
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11. 1000
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EB:
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EB:
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Equity T-Accounts
Liability and Owner’s Equity Accounts
Liability Accounts
- Accounts Payable +
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- Bank Note Payable +
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EB:
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EB:
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Owner's Equity Account
- Owner’s Equity +
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1. 50,000
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EB:
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Revenue Accounts
- Patient Services Revenue +
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EB:
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TRIAL BALANCE
Lake Superior Ambulatory Care Facility
March 31, 20xx
Note: Use Ending Balances of each type of account to create the trial balance
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Debit
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Credit
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Cash
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Prepaid Rent
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1000
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Inventory
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Equipment
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Accounts Receivable
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|
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Supply Expense
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Interest Expense
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Utilities Expense
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Salary & Wage Expense
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Rent Expense
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1000
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Accounts Payable
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Bank Note Payable
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Owner’s Equity
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50,000
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Patient Services Revenue
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TOTAL
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__________________
A + E
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_________________
L + OE + R
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Assets +Expenses=Liabilities + Owner's Equity + Revenues