Accounting Cycle Problem
Bluemark Health Care Inc. is owned and operated by Dr. George Hancock, the sole stockholder.
Bluemark's January 1, 2015 trial balance appears below.
Bluemark Health Care, Inc.
Trial Balance
January 1, 2015
| Account |
|
|
Debit |
Credit |
| Cash |
|
|
30,000 |
|
| Accounts Receivable |
|
50,000 |
|
| Prepaid Insurance |
|
- |
|
| Supplies |
|
|
2,000 |
|
| Building |
|
|
330,000 |
|
| Accumulated Depreciation |
|
40,000 |
| Land |
|
|
150,000 |
|
| Accounts Payable |
|
|
33,500 |
| Unearned Rent Revenue |
|
- |
| Wages Payable |
|
|
- |
| Interest Payable |
|
|
- |
| Notes Payable |
|
|
200,000 |
| Capital Stock |
|
|
|
50,000 |
| Retained Earnings |
|
|
238,500 |
| Dividends |
|
|
- |
|
| Income Summary |
|
|
|
| Service Revenue |
|
|
- |
| Rent Revenue |
|
|
- |
| Wages Expense |
|
- |
|
| Utilities Expense |
|
- |
|
| Rent Expense |
|
- |
|
| Interest Expense |
|
- |
|
| Miscellaneous Expense |
|
|
| Advertising Expense |
|
- |
|
| Supplies Expense |
|
- |
|
| Insurance Expense |
|
- |
|
| Depreciation Expense |
|
- |
|
|
|
|
562,000 |
562,000 |
Bluemark Health Care completed the following transactions during January 2015:
| Trans #/Date |
Description |
| # 1 - Jan 1 |
Received $15,000 from Rivers Company as rent for the use of a vacant office in Bluemark |
| |
Health Care's building. Rivers paid rent six months in advance (hint: credit unearned rent revenue). |
| #2 - Jan 1 |
Paid $26,400 for an insurance premium on a general business policy. This payment |
| |
was debited to Prepaid Insurance. |
|
|
|
|
| #3 - Jan 6 |
Purchased supplies of $4,000 on account. |
|
|
|
|
| #4 - Jan 9 |
Collected $24,000 for services provided to customers on account. |
|
|
| #5 - Jan 11 |
Paid creditors $18,000 on account. |
|
|
|
|
| #6 - Jan 18 |
The sole shareholder invested an additional $100,000 in the business in exchange for |
| |
capital stock. |
|
|
|
|
|
|
| #7 - Jan 20 |
Billed patients $126,000 for services provided on account. |
|
|
| #8 - Jan 25 |
Received $23,500 for services provided to customers who paid cash. |
|
| #9 - Jan 30 |
Paid cash for expenses as follows: wages, $53,000, utilities, $5,000, rent on medical |
| |
equipment, $6,600, miscellaneous, $400, and advertising, $3,900. |
|
|
| #10 - Jan 30 |
Paid dividends of $14,000 to stockholders (Dr. Hancock). |
|
|
|
| #11 - Jan 30 |
Received $90,000 cash from customers in payment of services billed on Jan 20. |
January 31, 2015 Bluemark Health Care adjustment data appears below:
| Adjust A |
$4,400 of the prepaid insurance expired during January. |
| Adjust B |
$3,000 of supplies were on hand on January 31. (hint: check the unadj supplies bal first). |
| Adjust C |
January depreciation on building was $1,000. |
| Adjust D |
$2,500 of unearned rent revenue was earned. |
| Adjust E |
Wages owed employees but not paid was $9,600. |
| Adjust F |
Services provided but not yet billed to patients was $11,000. |
| Adjust G |
There was $1,800 in interest payable on 1/31/15 related to the $200,000 notes payable. |
Requirements:
1 Under "Journal Entries" in the "journal, adjust & close entries" worksheet, prepare journal entries for the 11 transactions in January 2015.
2 Post (enter) the journal entries from (1) to the Ledger (T-Accounts) in the "Ledger" worksheet. (Beginning balances have already been entered in the Ledger accounts.)
3 Under "Adjusting Entries" in the "journal, adjust & close entries" worksheet, prepare the adjusting entries A through G.
4 Post (enter) the adjusting entries from (3) to the Ledger (T-Accounts) in the "Ledger" worksheet.
5 Prepare the adjusted trial balance in the "adjusted and post trial balance" worksheet by transferring the adjusted ending balances from the "Ledger" worksheet.
6 Prepare an income statement and retained earnings statement for January 2015 and a January 31, 2015 balance sheet in the "financial statements" worksheet using the ending balances from the adjusted trial balance.
7 Prepare closing entries at January 31, 2015 (in the "journal, adjust & close entries" worksheet) as follows:
(1) Close revenue to Income Summary Account
(2) Close expenses to Income Summary Account
(3) Close Income Summary Account to Retained Earnings
(4) Close Dividends to Retained Earnings
8 Post (enter) closing entries from (7) to the Ledger (T-Accounts) in the "Ledger" worksheet.
Then prepare a January 31, 2015 post-closing trial balance in the "adjusted and post trial balance" worksheet by transferring the final balances from the "Ledger" worksheet.
(Note: there should be no income statement accounts appearing on the post-closing trial balance because the income statement accounts should all have zero balances.)
Attachment:- bluemark project.xlsx