1. Record the above activity, and then prepare an income statement for July 2009 and a balance sheet as of July 31, 2010.

2. Was DSAC successful during its first month of operation? Explain.

Rachel Saunders graduated from The Ohio State University College of Veterinary Medicine in 2001. She then worked as a staff veterinarian in a medium- size veterinary practice in Worthington, Ohio, until 2009, when she opened her own practice in nearby Dublin, Ohio. Dr. Saunders established Dublin Small Animal Clinic (DSAC) on July 1, 2009, by purchasing all of its common stock for $ 125,000. That same day DSAC paid $ 2,500 to an attorney who prepared DSAC’s legal documents and filed incorporation documents with the State of Ohio; paid $ 90,000 for medical instruments, furniture, and equipment; and signed a three- year lease on office space for $ 5,000 per month, payable the first day of each month, and paid that amount. During July 2009, DSAC received $ 18,500 from clients for office visits, surgery, medical supplies, and drugs. During July, DSAC also paid $ 1,500 for drugs and medical supplies, $ 500 for office supplies, and $ 13,750 for wages and benefits (which included $ 6,500 for Dr. Saunders). At the end of July, DSAC had negligible drugs, medical sup-plies, or office supplies in inventory.