January 1,2012 is the first day of operations for Almaden Health Services. The f

Question

January 1,2012 is the first day of operations for Almaden Health Services. The following items summarize the 2012 financial events for the company: 1. On January 1,2012 common stock was issued to equity investors for $10,000. 2. A 5% SBA loan of $30,000 was received on January 2, 2012. The loan is to be repaid on January 2, 2013. 3. Paid $25,000 for furniture and medical equipment on January 3, 2012. 4. During 2012, $40,000 was paid for miscellaneous operating activities. All of these payments were made in cash. The payments were for a combination of services and medical supplies. Almaden inventories its medical supplies. $6,000 of medical supplies was on hand at December 31, 2012. 5. During 2012, Almaden billed its patients $60,000 for services provided. On December 31, 2012, the patients still owed $7,000. 6. The furniture and equipment is being depreciated over 5 years using tfie straight-line depreciation method. Items received in the first half of a month are charged a full month's depreciation expense. 7. Almaden annually pays cash dividends to its owners equal to 30% of net income. 8. Almaden is an income tax-exempt business.

Explanation / Answer

date Accounts Title Dr Cr Jan-01 Cash $10000 Common stock $10000 Jan-02 Cash 30000 Short term Loan 30000 Jan-03 Furniture & Equipment 25000 Cash 25000 Miscelleneous Operating expenses 34000 Accounts payable 6000 Cash $40000 (as mentioned that it includes medical supplies $6000 so assumimg it is not paid so now paid) Adjusting entry Medical Supplies Expenses 6000 Medical supplies 6000 (being used this year, as mentioned that it is used in current year) 5 Accounts Receivable 60000 Revenue from services 60000 Adjusting entry Cash 53000 Accounts Receivable (60000-7000) 53000 31-Dec Depreciation Expense (25000/5) 5000 6 Accumulated Depreciation-Furniture & equipment 5000 7 Retained earning 6000 Dividend payable 6000 (30*(60000-40000)) Dividend payable 6000 Cash 6000

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