Exercise 4-10 Jim Haught, D.D.S., opened an incorporated dental practice on Janu

Question

Exercise 4-10

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. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.

Account Titles and Explanation

Debit

Credit

1. Performed services for patients who had dental plan insurance. At January 31, $760 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 $450. 3. Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a $60,000, 3-year note payable (interest is paid each December 31). The equipment depreciates $400 per month. Interest is $500 per month. 4. Purchased a 1-year malpractice insurance policy on January 1 for $24,000. 5. Purchased $1,750 of dental supplies (recorded as increase to Supplies). On January 31, determined that $550 of supplies were on hand.

Explanation / Answer

Calculation Ledger Debit Credit Insurance Co 760 To Unearned Revenue 760 Utility Expense 450 To Outstanding Expense 450 Equipment 80000 Cash 20000 Note Payable 60000 (400*12) Depriciation 4800 Asset 4800 (500*12) Interest Account 6000 Notes Payable 6000 Malpractice Insurance 24000 Cash 24000 Inventory 1750 Creditor 1750

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