Dr. Cravati,
ACCT201/EXERCISE QUESTION 4/CH.3
Question DMD., opened a dental clinic on August 1, 2007. The business transactions for August are shown below:
|Aug 1 |Dr. Cravati invested $280,000 cash in the business in exchange for 1,000 shares of capital stock. |
|Aug 1 |Rented an office and paid 3-month rent in advance, $2,000 |
|Aug 4 |Land and building were purchased for $400,000. Of this amount, $60,000 applied to the land and $340,000 to|
| |the building which has an estimated useful life of 80 years. A cash payment of $80,000 was made at the |
| |time of the purchase, and a note payable was issued for the remaining balance. |
|Aug 5 |Issued bonds, $200,000. Maturity period for the bonds was 3 years. Coupon interest rate was 9% and |
| |interest was to be paid semiannually. |
|Aug 9 |Medical instruments were purchased for $75,000 cash. Useful life was expected to be 10 years. |
|Aug 10 |Purchased vans in cash, $6,000. Useful life was expected to be 10 years. |
|Aug 11 |Made advance collections from several customers and promised to provide them with medical service during |
| |August and September, $7,000. Amount of service revenue which would be earned from those customers was to |
| |be equal for each day. |
|Aug 12 |Purchased stocks of a corporation in cash with an intention to sell within a short period of time, $7,000.|
|Aug 15 |Paid $800 for 1-year vehicle insurance |
|Aug 15 |Paid
Question DMD., opened a dental clinic on August 1, 2007. The business transactions for August are shown below:
|Aug 1 |Dr. Cravati invested $280,000 cash in the business in exchange for 1,000 shares of capital stock. |
|Aug 1 |Rented an office and paid 3-month rent in advance, $2,000 |
|Aug 4 |Land and building were purchased for $400,000. Of this amount, $60,000 applied to the land and $340,000 to|
| |the building which has an estimated useful life of 80 years. A cash payment of $80,000 was made at the |
| |time of the purchase, and a note payable was issued for the remaining balance. |
|Aug 5 |Issued bonds, $200,000. Maturity period for the bonds was 3 years. Coupon interest rate was 9% and |
| |interest was to be paid semiannually. |
|Aug 9 |Medical instruments were purchased for $75,000 cash. Useful life was expected to be 10 years. |
|Aug 10 |Purchased vans in cash, $6,000. Useful life was expected to be 10 years. |
|Aug 11 |Made advance collections from several customers and promised to provide them with medical service during |
| |August and September, $7,000. Amount of service revenue which would be earned from those customers was to |
| |be equal for each day. |
|Aug 12 |Purchased stocks of a corporation in cash with an intention to sell within a short period of time, $7,000.|
|Aug 15 |Paid $800 for 1-year vehicle insurance |
|Aug 15 |Paid