Reference no: EM131204875
(Learning Objective 3: Show the impact of business transactions on the accounting equation)
Bob Morin opened a medical practice specializing in surgery. During the first month of operation (August), the business, titled Bob Morin, Professional Corporation (P.C.), experienced the following events:
Aug 6 Morin invested $39,000 in the business, which in turn issued its common stock to him.
Aug 9 The business paid cash for land costing $29,000. Morin plans to build an office building on the land.
Aug 12 The business purchased medical supplies for $1,700 on account.
Aug 15 Bob Morin, P.C., officially opened for business.
Aug 15–31 During the rest of the month, Morin treated patients and earned service revenue of $7,600, receiving cash for half the revenue earned.
Aug 15–31 The business paid cash expenses: employee salaries, $1,300; office rent, $700; utilities, $500.
Aug 31 The business sold supplies to another physician for cost of $700. 31 The business borrowed $12,000, signing a note payable to the bank.
Aug 31 The business paid $800 on account.
?Requirements
1. Analyze the effects of these events on the accounting equation of the medical practice of Bob Morin, P.C.
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 Morin really own?
e. How much net income or net loss did the business experience during its first month of operations?
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