College of St. Scholastica
Department of Health Informatics and Information Management
TRANSACTION ACCOUNTING ASSIGNMENT
INSTRUCTIONS: Working independently and using the data and basic templates provided:
a. Prepare journal entries for above transactions. Note:the first two have been done for you.
b. Post journal entries to general ledger accounts (T-accounts)
c. Prepare a trial balance
The following transactions occurred in March, 20xx when Doctors Smith and Jones opened the Lake Superior Ambulatory Care Facility.
1. Each physician contributed $25,000 to the facility; thus beginning balance (BB) in Cash T-Account is $50,000 and in OE T-Account is 50,000
2. The first 2 months rent of $2000 was prepaid for their space (note: prepaid rent is an asset)
3. Inventory of supplies was purchased for $2500 on account with a local office supply vendor
4. They purchased equipment worth $5000, borrowing money from the bank via a short-term note
5. They collected $3,000 in cash payments from patients at the time of the visit
6. Patients were billed for $4,000 for services rendered. (note: revenue is earned when services are rendered)
7. While treating patients, $400 of supplies from inventory were used up. (note: when supplies are used they become expenses)
8. $2,500 was received in payment from patient who had been billed
9. The physicians paid $2500 plus $30 interest to the vendor from whom they had previously purchased inventory supplies
10. They paid other expenses of: utilities - $50 and Salaries/wages - $1600
11. The physicians recognized that one month’s prepaid rent had now been used up. (note: 1 month's prepaid rent now becomes an expense)
GENERAL JOURNAL
March 20xx
| | Debit | Credit |
| 1. Cash | $25,000 | |
| Cash | $25,000 | |
| Owner’s Equity | | $50,000 |
| Physician investment in clinic | | |
| | | |
| 2. Prepaid Rent | $2,000 | |
| Cash | $2,000 | $2,000 |
| Prepaid 2 months rent | | |
| | | |
| 3. Inventory | $2,500 | |
| Accounts Payable | | $2,500 |
| Purchase of inventory items | | |
| 4.Cash | $5,000 | |
| Bank Loan Payable | | $5,000 |
| Short term | | |
| 5. Accounts Payable | $3,000 | |
| Cash | | $5,000 |
| Cash payments on AP | | |
| 6.Accounts Receivable | $4,000 $2,500 | |
| Patient Services Revenue | | $4,000 $2,500 |
| Patients billed for services rendered | | |
| 7.Operating Expenses | | |
| Salaries and wages | $1600 | |
| Utilities Employee Insurance Repairs Other | $50 $400 $2530 | |
| 8. | | |
| | | |
| | | |
| 9. | | |
| | | |
| | | |
| | | |
| 10. | | |
| | | |
| | | |
| | | |
| 11. Rent Expense | $1000 | |
| Prepaid Rent | | $1000 |
| One month rent expensed | | |
GENERAL LEDGER
March 20xx
Asset T-Accounts
| + Cash - | + Prepaid Rent - | + Supply Inventory - |
| 1. 50,000 | 2. 2,000 | 2. 2,000 | XXXXXXXXXX | | |
| | | | | | |
| | | | | | |
| | | |
| EB: | EB: | EB: |
| + Equipment - | + Accounts Receivable - |
| | | | |
| | |
| EB: | EB: |
| | | |
Expense T-Accounts
| + Supply - | + Interest - | + Utilities - |
| | | | | | |
| | | |
| EB: | EB: | EB: |
| | | | | |
| + Salary & Wages - | + Rent - |
| | | XXXXXXXXXX | |
| | | | |
| EB: | EB: |
Equity T-Accounts Liability and Owner’s Equity Accounts
Liability Accounts
| - Accounts Payable + | - Bank Note Payable + |
| | | | |
| | | | |
| EB: | EB: |
Owner's Equity Account
| - Owner’s Equity + |
| | 1. 50,000 |
| | |
| EB: |
Revenue Accounts
| - Patient Services Revenue + |
| | |
| | |
| EB: |
TRIAL BALANCE
Lake Superior Ambulatory Care Facility
March 31, 20xx
Note: Use Ending Balances of each type of account to create the trial balance
| | Debit | Credit |
| Cash | | |
| Prepaid Rent | 1000 | |
| Inventory | | |
| Equipment | | |
| Accounts Receivable | | |
| | | |
| Supply Expense | | |
| Interest Expense | | |
| Utilities Expense | | |
| Salary & Wage Expense | | |
| Rent Expense | 1000 | |
| | | |
| Accounts Payable | | |
| Bank Note Payable | | |
| Owner’s Equity | | 50,000 |
| | | |
| Patient Services Revenue | | |
| | | |
| TOTAL | __________________ A + E | _________________ L + OE + R |
Assets +Expenses=Liabilities + Owner's Equity + Revenues