Dr. Rebecca Gray opened a medical practice specializing in physical

Dr. Rebecca Gray opened a medical practice specializing in physical therapy. During the first month of operation (January), the business, titled Dr. Rebecca Gray, Professional Corporation (P.C.), experienced the following events:

Jan 6 Gray invested $150,000 in the business, which in turn issued its common stock to her.

9 The business paid cash for land costing $63,000. Gray plans to build an office building on the land.

12 The business purchased medical supplies for $1,900 on account.

15 Dr. Rebecca Gray, P.C., officially opened for business.

15-31 During the rest of the month, Gray treated patients and earned service revenue of $9,600, receiving cash for half the revenue earned.

15-31The business paid cash expenses: employee salaries, $3,300; office rent, $1,200; utilities, $900.

31 The business sold supplies to another physician for cost of $700.

31 The business borrowed $35,000, signing a note payable to the bank.

31 The business paid $500 on account.


Requirements

1. Analyze the effects of these events on the accounting equation of the medical practice of Dr. Rebecca Gray, P.C.

2. After completing the analysis, answer these questions about the business.

a. How much are total assets?

b. How much does the business expect to collect from patients?

c. How much does the business owe in total?

d. How much of the business’s assets does Gray really own?

e. How much net income or net loss did the business experience during its first month of operations?


Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...