Jim Haught, D.D.S., opened an incorporated dental practice on January 1, 2014. D

Question

Jim Haught, D.D.S., opened an incorporated dental practice on January 1, 2014. During the first month of operations, the following transactions occurred.

Prepare the adjusting entries on January 31

1. Performed services for patients who had dental plan insurance. At January 31, $940 of such services was completed but not yet billed to the insurance companies. 2. Utility expenses incurred but not paid prior to January 31 totaled $530. 3. Purchased dental equipment on January 1 for $86,150, paying $22,500 in cash and signing a $63,650, 3-year note payable (interest is paid each December 31). The equipment depreciates $420 per month. Interest is $680 per month. 4. Purchased a 1-year malpractice insurance policy on January 1 for $12,000. 5. Purchased $1,930 of dental supplies (recorded as increase to Supplies). On January 31, determined that $530 of supplies were on hand.

Explanation / Answer

Adjusting Journal Entries on January 31:

Date / Serial no. Account Title and explanation Debit $ Credit $ 1 Accounts Receivable 940 Dental Plan insurance services Revenue 940 2 Utility Expenses 530 Accounts Payable 530 3 Dental Equipment 86150 Cash 22500 Note Payable 63650 Depreciation 420 Accumulated Depreciation 420 Interest 680 Interest Payable 680 4 Insurance expense 1000 Expired Malpractice Insurance Policy 1000 5 Supplies expenses 1400 Supplies 1400 (supplies inventory $530, so consumed $1400)

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