Drs. Glenn Feltham and Gary Entwistle began operations of their physical therapy

Tuesday July 19, 2022

Drs. Glenn Feltham and Gary Entwistle began operations of their physical therapy clinic called Northland Physical Therapy on Jan 1 2005. THe annual reporting period ends December 31. The trial balance on January 1 2006 was as follows(the amounts are rounded to thousands of dollars to simplify) Transactions during 2006 (summarized in thousands of dollars) follow: a. Borrowed $22 cash on July 1 2006 signing a short-term note payable. b. Purchased equipment for $20 cash on July 1 2006. c. Issued additional shares of stock for $5. d. Earned revenues for 2006 $55 including $8 on credit and $47 received in cash. e. Recognized operating expenses for 2006 $30 including $5 on credit and $25 in cash. f. Purchased other assets $3 cash. g. Collected accounts receivable $9. h. Paid accounts payable $7. i. Purchased on account supplies for future use $8. j. Received a $3 deposit from a hospital for a contract to start January 5 2007. k. Declared a dividend $4. l. Paid the $4 dividend in cash. Data for adjusting journal entries: m. Supplies of $4 were counted on December 31 2006. n. Depreciation for 2006 $5. o. Accrued interest on notes payable of $1. p. Wages earned since the December 27 payroll not yet paid $2. q. Income tax for 2006 was $4 and will be paid in 2007. Required: 1. Set up T-accounts for the accounts on the trial balance and enter beginning balances. 2. Record journal entries for transactions a through l and post them to the T-accounts. 3. Prepare an unadjusted trial balance. 4. Record and post the adjusting journal entries m through q. 5. Prepare an adjusted trial balance. 6. Prepare an income statement statement of retained earnings and balance sheet. 7. Prepare and post the closing journal entries. 8. Prepare a post-closing trial balance. 9. How much net income did the physical therapy clinic generate during 2006? Is the business financed primarily by debt or equity?

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