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Magazine Chapter 1: Q29E (page 40)
Ashley Stamper opened a medical practice. During July, the first month of operation, the business, titled Ashley Stamper, MD, experienced the following events: Jul. 6 Received a contribution of \(68,000 from Stamper and opened a bank account in the name of A. Stamper, MD. The corporation issued common stock to Stamper. 9 Paid \)56,000 cash for land. 12 Purchased medical supplies for \(1,500 on account. 15 Officially opened for business. 20 Paid cash expenses: employees鈥� salaries, \)1,300; office rent, \(1,500; utilities, \)100. 31 Earned service revenue for the month, \(13,000, receiving cash. 31 Paid \)1,050 on account. Analyze the effects of these events on the accounting equation of the medical practice of Ashley Stamper, MD, using the following format:
+ 鈥� ASSETS EQUITY Rent Expense 鈥� Utilities Expense Common 鈥� Stock Contributed Capital + + Dividends Retained Earnings 鈥� Salaries Expense Service Revenue + Medical Supplies C
Short Answer
Effect of the transaction on the accounting equation is shown as follows:
Assets | = | Liabilities | + | Equity | |||||||||||||||
Contributed Capital | + | Retained Earnings | |||||||||||||||||
Cash | + | Medical Supplies | + | Land | Accounts Payable | Common Stock | - | Dividends | + | Service Revenue | - | Salaries Expense | - | Rent Expense | - | Utilities Exp[ense | |||
July 6 | +68,000 | = | + | +68,000 | |||||||||||||||
Bal. | $68,000 | = | + | $68,000 | |||||||||||||||
July 9 | -56,000 | +56,000 | = | + | |||||||||||||||
Bal. | $12,000 | + | $56,000 | = | + | $6 8,000 | |||||||||||||
July 12 | +1,500 | = | +1,500 | + | |||||||||||||||
Bal. | $12,000 | + | $1,500 | + | $56,000 | = | $1,500 | + | $68,000 | ||||||||||
July 15 | - | - | - | = | - | + | - | - | - | - | - | - | |||||||
Bal. | $12,000 | + | $1,500 | + | $56,000 | = | $1,500 | + | $68,000 | ||||||||||
July 20 | -2,900 | = | + | -1,300 | -1,500 | -100 | |||||||||||||
Bal. | $9,100 | + | $1,500 | + | $56,000 | = | $1,500 | + | $68,000 | - | $1,300 | - | $1,500 | - | $100 | ||||
July 31 | +13,000 | = | + | +1,3000 | |||||||||||||||
July 31 | -1,050 | = | -1,050 | + | |||||||||||||||
Bal. | $21,050 | + | $1,500 | + | $56,000 | = | $450 | + | $68,000 | - | - | + | $13,000 | - | $1,300 | - | $1,500 | - | $1,00 |
$78,550 | $78,550 |
Step by step solution
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