During February 2015, Claude Sample who operates a sports clinic presented the following for the first month of his company’s operation: Feb 1. Sample invested $55,000 in the business by depositing it into the company’s bank account. Feb 2. Paid $46,000 cash for land. Feb 3. Purchased medical supplies for $1,800 on account. Feb 4. Officially opened for business. Feb 5. During the month, Sample treated patients and earned servicerevenue of $8,000, receiving cash. Feb 6. Paid cash expenses: employees’ salaries, $1,600; office rent, $900; utilities, $100. Feb 7. Returned supplies purchased on the 3rd for the cost of those supplies,$700. Feb 8. Paid $1,100 on account for purchases made on Feb 3.
During February 2015, Claude Sample who operates a sports clinic presented the following for the first month of his company’s operation:
Feb 1. Sample invested $55,000 in the business by depositing it into the company’s bank account.
Feb 2. Paid $46,000 cash for land.
Feb 3. Purchased medical supplies for $1,800 on account.
Feb 4. Officially opened for business.
Feb 5. During the month, Sample treated patients and earned servicerevenue of $8,000, receiving cash.
Feb 6. Paid cash expenses: employees’ salaries, $1,600; office rent, $900;
utilities, $100.
Feb 7. Returned supplies purchased on the 3rd for the cost of those supplies,$700.
Feb 8. Paid $1,100 on account for purchases made on Feb 3.
Requirement:
- Analyze the effects of these events on the
accounting equation of the sports clinic. For example, the transaction increased asset and increased capital; the transaction increased expenses and decreased cash; the transaction increased asset and decreased asset; etc. - Prepare the
journal entries to record the above transactions. Post the transaction to the “T” accounts of the company and balance off each account.
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