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Conceptual Framework First Problem

1) The document contains journal entries recording various financial transactions of a medical business from October 1 to November 1, 2020, including the initial investment, acquisition of assets, revenues and expenses. 2) Adjusting entries were made on October 31 to allocate prepaid insurance, adjust supplies inventory, record depreciation expense and interest expense. 3) Closing entries on October 31 transferred revenue and expense accounts to an income summary account and capital account. Reversing entries on November 1 removed accrued salaries and interest from expense accounts.

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John Joseph
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462 views

Conceptual Framework First Problem

1) The document contains journal entries recording various financial transactions of a medical business from October 1 to November 1, 2020, including the initial investment, acquisition of assets, revenues and expenses. 2) Adjusting entries were made on October 31 to allocate prepaid insurance, adjust supplies inventory, record depreciation expense and interest expense. 3) Closing entries on October 31 transferred revenue and expense accounts to an income summary account and capital account. Reversing entries on November 1 removed accrued salaries and interest from expense accounts.

Uploaded by

John Joseph
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Journal Entries page 1

Date Account Titles and Explanation P.R. Dr. Cr.


2020
1-Oct Cash 110 ₱ 250,000.00
Marasigan, Capital 310 ₱ 250,000.00
Initial investment

1-Oct Medical Building 160 ₱ 1,000,000.00


Land 150 ₱ 250,000.00
Cash 110 ₱ 50,000.00
20% Notes Payable 220 ₱ 1,200,000.00
Acquiring of assets with 20% interest payable

1-Oct Medical Equipment 170 ₱ 420,000.00


Medical Supplies 130 ₱ 39,000.00
Cash 110 ₱ 59,000.00
24% Notes Payable 210 ₱ 400,000.00
Acquiring of medical equipment and supplies

2-Oct Prepaid Insurance 140 ₱ 20,000.00


Cash 110 ₱ 20,000.00
Acquiring of All-in-one insurance

4-Oct Cash 110 ₱ 117,000.00


Medical Revenues 410 ₱ 117,000.00
Received cash from patients

7-Oct Medical Supplies 130 ₱ 17,000.00


Accounts Payable 230 ₱ 17,000.00
Bought medical supplies on account

10-Oct Salaries Expense 510 ₱ 73,000.00


Cash 110 ₱ 73,000.00
Paid salaries of nurses and staffs

12-Oct Cash 110 ₱ 90,000.00


Unearned Research Revenues 260 ₱ 90,000.00
Received cash over the next 3 months

18-Oct Accounts Receivable 120 ₱ 317,000.00


Medical Revenues 410 ₱ 317,000.00
Billed patients for service rendered

21-Oct Repairs Expense 530 ₱ 23,000.00


Cash 110 ₱ 23,000.00
Payment for repairing service
23-Oct Telephone Expense 560 ₱ 3,000.00
Cash 110 ₱ 3,000.00
Paid telephone bill

24-Oct Medical Equipment 170 ₱ 45,000.00


Accounts Payable 230 ₱ 45,000.00
Bought medical equipment on account

25-Oct Cash 110 ₱ 113,000.00


Accounts Receivable 120 ₱ 113,000.00
Collected cash from billed patients

27-Oct Accounts Payable 230 ₱ 13,000.00


Cash 110 ₱ 13,000.00
Paid accounts payable to San Pablo Supply

30-Oct Marasigan, Withdrawals 320 ₱ 200,000.00


Cash 110 ₱ 200,000.00
To record withdrawal of Marasigan

30-Oct Association Dues Expense 550 ₱ 15,000.00


Cash 110 ₱ 15,000.00
Paid dues to Laguna Medical Association

Adjusting Entries page 2


Date Account Titles and Explanation P.R. Dr. Cr.
2020
31-Oct Insurance Expense 520 ₱ 1,666.66
Prepaid Insurance 140 ₱ 1,666.66

31-Oct Supplies Expense 540 ₱ 35,000.00


Medical Supplies 130 ₱ 35,000.00

31-Oct Depreciation expense-Bldg. 570 ₱ 5,000.00


Depreciation expense-Equip. 580 ₱ 9,000.00
Accumulated Depreciation - Medical Building 165 ₱ 5,000.00
Accumulated Depreciation - Medical
Equipment 175 ₱ 9,000.00

31-Oct Unearned Research Revenues 260 ₱ 30,000.00


Research Revenues 420 ₱ 30,000.00

31-Oct Salaries Expense 510 ₱ 51,000.00


Salaries Payable 240 ₱ 51,000.00
31-Oct Interest Expense 590 ₱ 28,000.00
Interest Payable 250 ₱ 28,000.00

Closing Entries
31-Oct Medical Revenues 410 ₱ 434,000.00
Research Revenues 420 ₱ 30,000.00
Income Summary 330 ₱ 464,000.00

31-Oct Income Summary 330 ₱ 243,666.66


Salaries Expense 510 ₱ 124,000.00
Insurance Expense 520 ₱ 1,666.66
Repairs expense 530 ₱ 23,000.00
Supplies Expense 540 ₱ 35,000.00
Association Dues Expense 550 ₱ 15,000.00
Telephone Expense 560 ₱ 3,000.00
Depreciation expense-Bldg. 570 ₱ 5,000.00
Depreciation expense-Equip. 580 ₱ 9,000.00
Interest Expense 590 ₱ 28,000.00

31-Oct Income Summary 330 ₱ 220,333.34


Marasigan, Capital 310 ₱ 220,333.34

31-Oct Marasigan, Capital 310 ₱ 200,000.00


Marasigan, Withdrawals 320 ₱ 200,000.00

Reversing Entries page 3


Date Account Titles and Explanation P.R. Dr. Cr.
2020
1-Nov Salaries Payable 240 ₱ 51,000.00
Salaries Expense 510 ₱ 51,000.00

Interest Payable 250 ₱ 28,000.00


Interest Expense 590 ₱ 28,000.00

Ledger Accounts
Account: Cash Account No. 110
Date Explanation J.R. Dr. Cr. Balance
2020
1-Oct Initial investment J-1 ₱ 250,000.00 ₱ 250,000.00
Initial Payment to medical building and
1-Oct land J-1 ₱ 50,000.00 ₱ 200,000.00
Initial payment to medical equipment
1-Oct and supplies J-1 ₱ 59,000.00 ₱ 141,000.00
2-Oct Acquiring of All-in-one insurance J-1 ₱ 20,000.00 ₱ 121,000.00
4-Oct Received cash from patients J-1 ₱ 117,000.00 ₱ 238,000.00
10-Oct Paid salaries of nurses and staffs J-1 ₱ 73,000.00 ₱ 165,000.00
12-Oct Received cash over the next 3 months J-1 ₱ 90,000.00 ₱ 255,000.00
21-Oct Payment for repairing service J-1 ₱ 23,000.00 ₱ 232,000.00
23-Oct Paid telephone bill J-1 ₱ 3,000.00 ₱ 229,000.00
25-Oct Collected cash from billed patients J-1 ₱ 113,000.00 ₱ 342,000.00
Paid accounts payable to San Pablo
27-Oct Supply J-1 ₱ 13,000.00 ₱ 329,000.00
30-Oct To record withdrawal of Marasigan J-1 ₱ 200,000.00 ₱ 129,000.00
Paid dues to Laguna Medical
30-Oct Association J-1 ₱ 15,000.00 ₱ 114,000.00

Account: Accounts Receivable Account No. 120


Date Explanation J.R. Dr. Cr. Balance
2020
18-Oct Billed patients for service rendered J-1 ₱ 317,000.00 ₱ 317,000.00
25-Oct Collected cash from billed patients J-1 ₱ 113,000.00 ₱ 204,000.00

Account: Medical Supplies Account No. 130


Date Explanation J.R. Dr. Cr. Balance
2020
Acquiring of medical supplies with 24%
1-Oct notes payable J-1 ₱ 39,000.00 ₱ 39,000.00
7-Oct Bought medical supplies on account J-1 ₱ 17,000.00 ₱ 56,000.00

Account: Prepaid Insurance Account No. 140


Date Explanation J.R. Dr. Cr. Balance
2020
2-Oct Acquiring of All-in-one insurance J-1 ₱ 20,000.00 ₱ 20,000.00

Account: Land Account No. 150


Date Explanation J.R. Dr. Cr. Balance
2020
Acquiring of assets with 20% interest
1-Oct payable J-1 ₱ 250,000.00 ₱ 250,000.00

Account: Medical Building Account No. 160


Date Explanation J.R. Dr. Cr. Balance
2020
Acquiring of assets with 20% interest
1-Oct payable J-1 ₱ 1,000,000.00 ₱ 1,000,000.00

Account: Medical Equipment Account No. 170


Date Explanation J.R. Dr. Cr. Balance
2020
Acquiring of medical equipment and
1-Oct supplies J-1 ₱ 420,000.00 ₱ 420,000.00
24-Oct Bought medical equipment on account J-1 ₱ 45,000.00 ₱ 465,000.00
Account: 24% Notes Payable Account No. 210
Date Explanation J.R. Dr. Cr. Balance
2020
Acquiring of medical equipment and
1-Oct supplies J-1 ₱ 400,000.00 ₱ 400,000.00

Account: 20% Notes Payable Account No. 220


Date Explanation J.R. Dr. Cr. Balance
2020
Acquiring of assets with 20% interest
1-Oct payable J-1 ₱ 1,200,000.00 ₱ 1,200,000.00

Account: Accounts Payable Account No. 230


Date Explanation J.R. Dr. Cr. Balance
2020
7-Oct Bought medical supplies on account J-1 ₱ 17,000.00 ₱ 17,000.00
24-Oct Bought medical equipment on account J-1 ₱ 45,000.00 ₱ 62,000.00
Paid accounts payable to San Pablo
27-Oct Supply J-1 ₱ 13,000.00 ₱ 49,000.00

Account: Unearned Research Revenues Account No. 260


Date Explanation J.R. Dr. Cr. Balance
2020
12-Oct Received cash over the next 3 months J-1 ₱ 90,000.00 ₱ 90,000.00

Account: Marasigan, Capital Account No. 310


Date Explanation J.R. Dr. Cr. Balance
2020
1-Oct Initial Investment J-1 ₱ 250,000.00 ₱ 250,000.00

Account: Marasigan, Withdrawals Account No. 320


Date Explanation J.R. Dr. Cr. Balance
2020
30-Oct Withdrawal of Marasigan J-1 ₱ 200,000.00 ₱ 200,000.00

Account: Medical Revenues Account No. 410


Date Explanation J.R. Dr. Cr. Balance
2020
4-Oct Received cash from patients J-1 ₱ 117,000.00 ₱ 117,000.00
18-Oct Billed patients for service rendered J-1 ₱ 317,000.00 ₱ 434,000.00

Account: Salaries Expense Account No. 510


Date Explanation J.R. Dr. Cr. Balance
2020
10-Oct Paid salaries of nurses and staffs J-1 ₱ 73,000.00 ₱ 73,000.00

Account: Repairs Expense Account No. 530


Date Explanation J.R. Dr. Cr. Balance
2020
21-Oct Payment for repairing service J-1 ₱ 23,000.00 ₱ 23,000.00

Account: Association Dues Expense Account No. 550


Date Explanation J.R. Dr. Cr. Balance
2020
Paid dues to Laguna Medical
30-Oct Association J-1 ₱ 15,000.00 ₱ 15,000.00

Account: Telephone Expense Account No. 560


Date Explanation J.R. Dr. Cr. Balance
2020
23-Oct Paid telephone bill J-1 ₱ 3,000.00 ₱ 3,000.00

Dr. Nick Marsigan, M.D.


Income Statement
For the Month Ended October 31, 2020
Revenues
Medical Revenues ₱ 434,000.00
Research Revenues ₱ 30,000.00
Total ₱ 464,000.00
Expenses
Salaries Expense ₱ 124,000.00
Insurance Expense ₱ 1,666.66
Repairs expense ₱ 23,000.00
Supplies Expense ₱ 35,000.00
Association Dues Expense ₱ 15,000.00
Telephone Expense ₱ 3,000.00
Depreciation expense-Bldg. ₱ 5,000.00
Depreciation expense-Equip. ₱ 9,000.00
Interest Expense ₱ 28,000.00
Total ₱ 243,666.66
Profit ₱ 220,333.34

Dr. Nick Marsigan, M.D.


Statement of Changes in Equity
For the Month Ended October 31, 2020
Marasigan, Owner's Equity, 10/1/2020 ₱ 250,000.00
Add: Additional Investment by
Marasigan ₱ -
Profit ₱ 220,333.34
Total ₱ 470,333.34
Less: Withdrawals ₱ 200,000.00
Marasigan, Owner's Equity, 10/31/2020 ₱ 270,333.34
Dr. Nick Marasigan, M.D.
Balance Sheet
October 31, 2020
Assets
Currents Assets
Cash ₱ 114,000.00
Accounts Receivable ₱ 204,000.00
Medical Supplies ₱ 21,000.00
Prepaid Insurance ₱ 18,333.34
Total Current
Assets ₱ 357,333.34
Non-Current
Assets
Land ₱ 250,000.00
Medical Building ₱ 1,000,000.00
Less: Acc. Depreciation - Medical Bldg. ₱ 5,000.00 ₱ 995,000.00
Medical Equipment ₱ 465,000.00
Less: Acc. Depreciation - Medical Equip. ₱ 9,000.00 ₱ 456,000.00
Total Non-Current Assets ₱ 1,701,000.00
Total Assets ₱ 2,058,333.34
Liabilities
Currents
Liabilities
24% Notes Payable ₱ 400,000.00
Accounts Payable ₱ 49,000.00
Salaries Payable ₱ 51,000.00
Interest Payable ₱ 28,000.00
Unearned Research Revenues ₱ 60,000.00
Total Current Liabilities ₱ 588,000.00
Non-Current Liabilities
20% Notes Payable ₱ 1,200,000.00
Total Non-Current Liabilities ₱ 1,200,000.00
Total Liabilities ₱ 1,788,000.00
Owner's Equity
Marasigan, Capital ₱ 270,333.34
Total Liabilities and Owner's Equity ₱ 2,058,333.34

Dr. Nick Marasigan, M.D.


Post-Closing Trial Balance
October 31, 2020
Debit Credit
Cash ₱ 114,000.00
Accounts Receivable ₱ 204,000.00
Medical Supplies ₱ 21,000.00
Prepaid Insurance ₱ 18,333.34
Land ₱ 250,000.00
Medical Building ₱ 1,000,000.00
Accumulated Depreciation - Medical Building ₱ 5,000.00
Medical Equipment ₱ 465,000.00
Accumulated Depreciation - Medical
Equipment ₱ 9,000.00
24% Notes Payable ₱ 400,000.00
20% Notes Payable ₱ 1,200,000.00
Accounts Payable ₱ 49,000.00
Salaries Payable ₱ 51,000.00
Interest Payable ₱ 28,000.00
Unearned Research Revenues ₱ 60,000.00
Marasigan, Capital ₱ 270,333.34
₱ 2,072,333.34 ₱ 2,072,333.34

Adjusting Entries Ledger Form


Account: Medical Supplies Account No. 130
Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct Supplies that has been used J-2 ₱ 35,000.00 ₱ 35,000.00

Account: Prepaid Insurance Account No. 140


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct One month rent has been expired J-2 ₱ 1,666.66 ₱ 1,666.66

Account: Accumulated Depreciation-


Medical Building Account No. 165
Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct A portion of medical building depreciate J-2 ₱ 5,000.00 ₱ 5,000.00

Account: Accumulated Depreciation-


Medical Equip. Account No. 175
Date Explanation J.R. Dr. Cr. Balance
2020
A portion of medical equipment
31-Oct depreciate J-2 ₱ 9,000.00 ₱ 9,000.00

Account: Salaries Payable Account No. 240


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct Accrued salaries to its staffs J-2 ₱ 51,000.00 ₱ 51,000.00

Account: Interest Payable Account No. 250


Date Explanation J.R. Dr. Cr. Balance
2020
Generate interest payable due to notes
31-Oct payable J-2 ₱ 28,000.00 ₱ 28,000.00

Account: Unearned Research Revenues Account No. 260


Date Explanation J.R. Dr. Cr. Balance
2020
Portion of unearned revenue has been
31-Oct earned J-2 ₱ 30,000.00 ₱ 30,000.00

Account: Research Revenues Account No. 420


Date Explanation J.R. Dr. Cr. Balance
2020
Portion of unearned revenue has been
31-Oct earned J-2 ₱ 30,000.00 ₱ 30,000.00

Account: Salaries Expense Account No. 510


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct Accrued salaries occurred J-2 ₱ 51,000.00 ₱ 51,000.00

Account: Insurance Expense Account No. 520


Date Explanation J.R. Dr. Cr. Balance
2020
One month of one year insurance has
31-Oct been expired J-2 ₱ 1,666.66 ₱ 1,666.66

Account: Supplies Expense Account No. 540


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct The amount of supplies used J-2 ₱ 35,000.00 ₱ 35,000.00

Account: Depreciation Expense-Bldg. Account No. 570


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct The building depreciate J-2 ₱ 5,000.00 ₱ 5,000.00

Account: Depreciation Expense-Equip. Account No. 580


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct The medical equipment depreciate J-2 ₱ 9,000.00 ₱ 9,000.00

Account: Interest Expense Account No. 590


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct There’s a charge for interest expense J-2 ₱ 28,000.00 ₱ 28,000.00
Closing Entries Ledger Form
Account: Marasigan, Capital Account No. 310
Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct To close Income summary account J-2 ₱ 220,333.34 ₱ 220,333.34
To close withdrawal account J-2 ₱ 200,000.00 ₱ 20,333.34

Account: Marasigan, Withdrawals Account No. 320


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct To close the withdrawal account J-2 ₱ 200,000.00 ₱ 200,000.00

Account: Income Summary Account No. 330


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct To close the revenues accounts J-2 ₱ 464,000.00 ₱ 464,000.00
To close the expense accounts J-2 ₱ 243,666.66 ₱ 220,333.34
To close the Income summary J-2 ₱ 220,333.34 ₱ -

Account: Medical Revenues Account No. 410


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct This is to close Medical Revenues J-2 ₱ 434,000.00 ₱ 434,000.00

Account: Research Revenues Account No. 420


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct To close Research Revenues J-2 ₱ 30,000.00 ₱ 30,000.00

Account: Salaries Expense Account No. 510


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct To close the salaries expense J-2 ₱ 124,000.00 ₱ 124,000.00

Account: Insurance Expense Account No. 520


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct To close the interest expense J-2 ₱ 1,666.66 ₱ 1,666.66

Account: Repairs Expense Account No. 530


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct To close the repair expense J-2 ₱ 23,000.00 ₱ 23,000.00
Account: Supplies Expense Account No. 540
Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct To close the supplies expense J-2 ₱ 35,000.00 ₱ 35,000.00

Account: Association Dues Expense Account No. 550


Date Explanation J.R. Dr. Cr. Balance
2020
To close the association dues expense
31-Oct account J-2 ₱ 15,000.00 ₱ 15,000.00

Account: Telephone Expense Account No. 560


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct To close the telephone expense account J-2 ₱ 3,000.00 ₱ 3,000.00

Account: Depreciation Expense-Bldg. Account No. 570


Date Explanation J.R. Dr. Cr. Balance
2020
To close depreciation account of
31-Oct building J-2 ₱ 5,000.00 ₱ 5,000.00

Account: Depreciation Expense-Equip. Account No. 580


Date Explanation J.R. Dr. Cr. Balance
2020
To close depreciation account of
31-Oct equipment J-2 ₱ 9,000.00 ₱ 9,000.00

Account: Interest Expense Account No. 590


Date Explanation J.R. Dr. Cr. Balance
2020
31-Oct To close interest expense account J-2 ₱ 28,000.00 ₱ 28,000.00

Reversing Entries Ledger Form


Account: Salaries Payable Account No. 240
Date Explanation J.R. Dr. Cr. Balance
2020
1-Nov To pay the employees J-3 ₱ 51,000.00 ₱ 51,000.00

Account: Interest Payable Account No. 250


Date Explanation J.R. Dr. Cr. Balance
2020
To reverse the entries in interest
1-Nov payable account J-3 ₱ 28,000.00 ₱ 28,000.00
Account: Salaries Expense Account No. 510
Date Explanation J.R. Dr. Cr. Balance
2020
1-Nov To reverse the entries J-3 ₱ 51,000.00 ₱ 51,000.00

Account: Interest Expense Account No. 590


Date Explanation J.R. Dr. Cr. Balance
2020
1-Nov To reverse the interest expense J-3 ₱ 28,000.00 ₱ 28,000.00

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