Caren Smith opened a medical practice. During July, the first month of operation, the business, titled Caren Smith, M.D., experienced the following events:
Smith invested $55,000 in the business by opening a bank account in the name of C. Smith, M.D. The business gave capital to Smith.
Paid $46,000 cash for land.
Purchased medical supplies for $1,800 on account.
Officially opened for business.
During the rest of the month, Smith treated patients and earned service revenue of $8,000, receiving cash.
Paid cash expenses: employees' salaries, $1,600; office rent, $900; utilities, $100.
Returned supplies purchased on the 12th for the cost of those supplies, $700.
Paid $1,100 on account.
1.Analyze the effects of these events on the accounting equation of the medical practice of Caren Smith, M.D. Use a format similar to that of Exhibit 1-6, with headings for Cash; Medical supplies; Land; Accounts payable; and Smith, capital.
The expert examines balance sheet medical practice events.