Posted in Randolph Noble opened a medical practice specializing in surgery. During the first month of operation (August), the business, titled Randolph Noble, Professional Corporation (P.C.), experienced the following events:
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August 6 |
Noble invested $50,000 in the business, which in turn issued its common stock to him. |
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9 |
The business paid cash for land costing $30,000. Noble plans to build ‘an office building on the land. |
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12 |
The business purchased medical supplies for $2,000 on account. |
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15 |
Randolph Noble, P.C., officially opened for business. |
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15–31 |
During the rest of the month, Noble treated patients and earned service revenue of $8,000, receiving cash for half the revenue earned. |
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15–31 |
The business paid cash expenses: employee salaries, $1,400; office rent, $1,000; utilities, $300. |
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31 |
The business sold supplies to another physician for the supplies’ cost of $500. |
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31 |
The business borrowed $10,000, signing a note payable to the bank. |
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31 |
The business paid $1,000 on account. |
Required
1. Analyze the effects of these events on the accounting equation of the medical practice of Randolph Noble, P.C. Use a format similar to that of Exhibit 2-1, Panel B, with headings for Cash, Accounts Receivable, Medical Supplies, Land, Accounts Payable, Note Payable, Common Stock, and Retained Earnings.
2. After completing the analysis, answer these questions about the business.
a. How much are total assets?
b. How much does the business expect to collect from patients?
c. How much does the business owe in total?
d. How much of the business’s assets does Noble really own?(
e. How much net income or net loss did the business experience during its first month of operations?
