Warr22e_IM_TM_Ch02 - Transparency Master 2-1 Assets =...

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Transparency Master 2-1 Assets = Liabilities + Owner’s Equity OWNER’S EQUITY ACCOUNTS Account Used to Record Capital Owner’s Investments Drawing Owner’s Withdrawals Revenue Revenues from Customers Expense Expenses Incurred in Running the Business
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Transparency Master 2-2 CHART OF ACCOUNTS Larry Sharp, M. D. The following information pertains to the medical practice of Larry Sharp, M. D. Using the information, develop a chart of accounts for Dr. Sharp. Remember to number the accounts using a flexible system of indexing, as described in your text- book. 1. Dr. Sharp is the sole owner of his medical practice. 2. Dr. Sharp has the following assets that are used in the business: $15,000 in cash, $1,200 worth of supplies, and medical equipment that cost $8,900. 3. Dr. Sharp buys all of his medical supplies on account and pays for them within 30 days of the purchase. 4. In payment for his services, Dr. Sharp will accept cash or will bill his patients. 5. Dr. Sharp rents his office space. His lease agreement re- quires him to pay his own utilities. 6. Dr. Sharp is required to carry malpractice insurance, which is paid at the beginning of each year. 7. Dr. Sharp has one receptionist and one medical assistant who work for him full-time. Each year, he buys the recep- tionist and assistant flowers on their birthdays. 8. To keep current on medical advances, Dr. Sharp fre- quently attends medical seminars. These seminars can cost as much as $10,000 each year.
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Transparency Master 2-3 SAMPLE CHART OF ACCOUNTS Larry Sharp, M. D. Assets 10 Cash 11 Accounts Receivable 12 Supplies 13 Prepaid Insurance 14 Medical Equipment Liabilities 21 Accounts Payable Owner's Equity 31 Larry Sharp, Capital 32 Larry Sharp, Drawing Revenues 41 Fees Earned Expenses 51 Wages Expense 52 Rent Expense 53 Utilities Expense 54 Medical Seminar Expense 55 Supplies Expense 56 Miscellaneous Expense
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Transparency Master 2-4 POSTING ENTRIES INTO T ACCOUNTS Mark Gordon decided to start a business as a disc jockey for wedding receptions, reunions, and other parties. His business is called Music Express. Record the fol- lowing journal entries for Music Express and post these entries to the appropriate T accounts. a. Mark transferred $7,000 from a personal bank account to an account to be used for his business.
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