BTB110 – Fall, 2009 (Chapter 2, 3 related)
November Transactions for Family Health Care (refer to page 2 transaction analysis)
a) On November 1, received $1800 from ILSCompany as rent for the use of Family
Health Care’s land as a temporary parking lot from November, 2009 through
March, 2010
b) On November 1, paid $2400 for an insurance premium on a 2 year, general
business policy.
c) On November 1, paid $6000 for an insurance premium on a six-month medical
malpractice policy.
d) Dr. Landry invested an additional $5000 in the business in exchange for cpital
stock.
e) Purchased supplies for $240 on account.
f) Purchased $8500 of office equipment. Paid $1700 cash as a down payment with
the remaining $6800 ($8500 - $1700) due in 5 monthly installments of $1360
beginning January 1.
g) Provided services of $6100 to patients on account.
h) Received $5500 for services provided to patients who paid cash.
i) Received $4200 from insurance companies, which paid on patients’ accounts for
services that has been provided.
j) Paid $100 on account for supplies that had been purchased.
k) Expenses paid during November were as follows: wages, $2790; rent, $800;
utilities, $580; interest, $100 and miscellaneous, $420.
l) Paid dividends of $1200 to stockholders (Dr. Landry)
The following are adjustments for Family Health Care, and represent the changes that
have been determined to have taken place at November 30:
Deferred Expenses
1. Prepaid insurance that has expired - $1,100
2. Supplies have been used, $150
3. Depreciation on office equipment, $160
Deferred Revenue
1. Unearned revenue that has been earned, $360
Accrued Expenses
1. Wages owed but not paid to employees, $220
Accrued Revenue
1.services provided but not yet billed to the insurance companies, $750
1
Family Health Care Transactions-for the month of November
Cash Flow Statement
Assets
Cash
Balances, November 1
a)rec’d rent in advance
Accts
Rec.
Prepd
Ins.
Balance Sheet
Supp.
Office
Equip
9120
Liabilities
Land
Notes
Pay
12000
Income Statement
Accts
Pay
10000
Shareholders Equity
Unear
Capital
ned
Stock
Reven
ue
1800
6000
1800
Retained
Earnings
3320
1800
b)paid 2 yrs insurance in
advance
c)pd. Ins. For 6 mo.
d)issue cap. Stock
e)purch supplies
f)purch office equipment
g)fees earned on account
h)fees earned for cash
i)Payment rec’d on
account
j)payment on account
k)payment of expenses
l) payment of dividends
Totals
Statement of Cash Flows
Operating +1800
Operating -2400
Operating -6000
Financing +5000
Investing -1700
Operating +5500
Operating +4200
Operating - 100
Operating -4690
Financing -1200
Change in Cash =+410
2
-2400
2400
-6000
+5000
6000
+5000
+240
-1700
+240
+6800
+8500
+6100
+5500
+4200
-100
-4690
-1200
9530
+6100
+5500
g)
h)
-4690
-1200
9030
k)
-4200
-100
1900
8400
240
8500
12000
10000
6940
3600
11000
Fees Earned +6100
Fees Earned +5500
Wages Exp. -2790
Rent Exp
- 800
Utilities Exp. - 580
Interest Exp. - 100
Misc. Exp.
-420
Net Income = 6910
Income Statement
Formula is Revenue – Expenses = Net Income (Loss)
11,600 – 4690
= 6910
Change in Retained Earnings
Formula is Beginning Retained Earnings + Net Income – Dividends Paid = Ending Retained Earnings
3320
+ 6910
- 1200
= 9030
Balance Sheet
Formula is Assets = Liabilities + Shareholder Equity
Cash + Accts Rec + Prepaid Ins. + Supplies + Office Equip+ Land = Notes Pay + Accts Pay+ Unearned Revenue + Capital Stock + Retained Earnings
9530 + 1900
+ 8400
+ 240
+ 8500
+ 12,000 = 10,000 + 6940
+ 3600
+ 11,000
+ 9030
40,570
40,570
Change in Cash Flow
Financing
Cash in from additional investment
Cash out from payment of dividends
Net cash in from Investing
+5000
-1200
+3800
Investing
Cash out for purchase of office equipment
Operations
Cash in from fees earned
Cash in from rental income
Total cash received from operations
Cash out for payment of expenses
Cash out for payment of insurance
Cash out for payment of supplies (had been purchased
On account)
Cash payments for operations
Net cash outflow for operations
Net Increase in Cash for November
Add Cash Balance for November 1
3
-1700
+9700
+1800
11,500
-4690
-8400
-100
-13,190
-1690
+410
+9120
+9530 (Matches balance for cash at November 30)
Family Health Care Transactions-for the month of November Adjustments
Cash Flow
Balance Sheet
Statement
Assets
Liabilities
Cash
Accts
Prepd
Supp.
Office
Land
Notes
Accts
Rec.
Ins.
Equip
Pay
Pay
Balances,before
adjustments
4
9530
1900
8400
240
8500
12000
10000
6940
Income Statement
Unear
ned
Reven
ue
3600
Shareholders Equity
Capital
Retained
Stock
Earnings
11000
9030
5