Using the information given in P15-6 and P15-7, record the transactions in general journal form.
Then, post the journal entries to ledger T-accounts, like those shown in Table 15-11 . (To help keep track of your postings, give each journal entry the same reference number or letter shown in the problems, and insert that number or letter to the left of the amount recorded in the T-accounts.)
In P15-7
Analyze the following accrual-type events, and add them to the work sheet you prepared for P15-6.
1. Adjust for the “using up” of the MRI equipment during the month. (Assume the equipment will have a useful life of 10 years.)
2. Accrue 1 month’s interest owed on the note payable. (Add a column for Interest payable.)
3. Adjust for the expiration of the entire rent payment.
In P15-6.
Dr. Harlan Elliott opened a magnetic resonance imaging (MRI) facility, to be known as Harlan MRI. The following transactions took place during his first month of operation. Analyze these transactions on a work sheet similar to that illustrated in the text. You will need columns for Cash, Accounts receivable, Supplies inventory, Prepaid rent, Equipment, Notes payable, Accounts payable, Withholding taxes payable, and H. Elliott, Capital.
1. Dr. Elliott invested $ 80,000 in the business.
2. He purchased MRI equipment from the manufacturer for $ 1,800,000. To pay for the equipment, Harlan gave the manufacturer a note. He was required to repay the note in five annual payments of $ 360,000 each, together with interest of 6 percent a year on the unpaid balance.
3. He purchased supplies for $ 25,000 on credit. The supplies were received and put in inventory.
4. At the beginning of the month, he paid rent in the amount of $3,000.
5. He paid the bill for supplies in the amount of $25,000.
6. During the month, he incurred technician salaries of $12,000. Of this amount, he paid $11,000 in cash to employees. He withheld the other $1,000 from their salaries for taxes, which he will pay the government next month.
7. He billed his patients in the amount of $40,000 for MRI services.
8. On receiving the bills, the patients paid Dr. Elliott a total of $35,000.
9. During the month, he paid bills amounting to $4,000 for utility services.
10. He took inventory of the supplies and found that he had consumed $2,000 of those supplies in the course of the month’s activities.