Dr. Dolittle had a veterinary clinic_ Financial statements

Dr. Dolittle had a veterinary clinic. The following accounts and balances appeared
on the books as of April 30, 2013:

Cash $22,000 Notes Payable $10,000
Accounts Receivable 8,000 Accounts Payable 7,000
Office Supplies
2,000 Contributed Capital 70,000

Land ` 40,000 Retained Earnings 33,000
Building 35,000 Veterinary
Service Revenue 70,000
Office Fixtures and Equipment 27,000 Advertising Expense
10,000
Medical Instruments 18,000 Salary Expense 28,000

The business transactions
for May are shown below:

MAY
1 Dr. Dolittle invested $400,000 cash in
the business in exchange for
5,000
shares of stock.

4 Additional land and a buildings were
purchased for $150,000. Of this amount,
$70,000
applied to the land, and $80,000 to the building. A cash payment of
$90,000
was made at the time of the purchase, and a note payable was issued for
the remaining
balance.

9 Medical instruments were purchased for
$130,000 cash.

16 Office
fixtures and equipment were purchased for $50,000. Dr. Dolittle paid
$20,000 at
the time of purchase and agreed to pay the entire remaining balance in
15 days
(account payable).

21 Office
supplies expected to last several months were purchased for $5,000 cash.

24 Dr. Dolittle
billed clients $9,200 for services rendered.
Of this amount, $7,900
was
received in cash, and the balance was billed on account (due in 30 days).

27 A $800
invoice was received for several radio advertisements aired in May.
The
entire amount is due to be paid on June 5.
(Use accounts payable)

28 Received $6,500
from account receivable collected

29 Paid $5,500
of accounts payable that had become due.

31 Paid
employees $4,200 for salaries earned by them in May.
See next page for instructions
INSTRUCTIONS:
A. Make up a T account for each
account and put in the beginning balances as given
above.

B. Prepare journal
entries for each transaction (list date, then the accounts and amounts
debited and credited- in good form) For example, May 1
May
1 Cash (+A) 400,000
Capital
Stock (+SE) 400,000

4 ???????
??????

C. Analyze the
effects that each of these transactions will have on the following six
components of
the company’s financial statements for the month of May.
Organize your
answer in tabular from, using the column headings shown below. Use
I for
increase, D for decrease, and NE
for no effect. The May 1 transaction
would be as follows:

Income Statement Balance Sheet
Transaction
Revenue – Expense = NI Assets = Liabilities + Owners’ Equity
May 1 NE NE NE I NE I

4
etc.

D. Post each
transaction from (B) to the appropriate T account.

E.
Prepare a trial balance dated May 31, 2013. A trial balance lists all accounts in a
column, then all debit balances opposite those with debit, all credit balances
opposite those accounts with credit balances, and proves that total debits
equal total credits.

F. Using figures from
the trial balance prepared in part E, compute total assets, total
liabilities, and
owners’ equity.

G. Did May appear
to be a profitable month? (support your
answer)