Deferred revenues:- Unearned revenue earned, $360.
Accrued expense:- Wages owed employees but not paid, $340.
Accrued revenue:- Services provided but not billed to insurance companies, $1,050.
Enter the adjustments in the integrated financial statement framework. Identify each
adjustment by “a” and the number of the related adjustment item. For example, the
adjustment for prepaid insurance should be identified as (a1).- Prepare the December financial statements, including the income statement, retained
earnings statement, balance sheet, and statement of cash flows. - (Appendix) Reconcile the December net income with the net cash flows from
operations. (Note:In computing increases and decreases in amounts, use adjusted
balances.)
Solution
[Solutions to (1) and (2) are found on page 128. Solution to (3) is found below and on page 127.]3.126 Chapter 3 Accrual Accounting Concepts
Fees earned $18,350
Operating expenses:
Wages expense $4,320
Insurance expense 1,100
Rent expense 800
Utilities expense 610
Supplies expense 275
Depreciation expense 160
Interest expense 100
Miscellaneous expense 520
Total operating expenses 7,885
Operating income $10,465
Other income:
Rental revenue 360
Net income $10,825Retained earnings, December 1, 2007 $ 8,510
Net income for December $10,825
Less dividends 1,200 9,625
Retained earnings, December 31, 2007 $18,135Family Health Care, P.C.
Income Statement
For the Month Ended December 31, 2007Family Health Care, P.C.
Retained Earnings Statement
For the Month Ended December 31, 2007