Reference no: EM133008040

Question - Ricardo Hernandez, D.D.S., opened a dental practice on January 1, 2021. During the first month of operations, the following transactions occurred requiring adjusting entries. Ricardo has his bookkeeper prepare adjusting entries monthly.

-Performed services for patients with various dental needs. At January 31, $785 of such services were performed but not yet recorded or paid for.

-At the end of January, Hernandez called the local utility company to determine the cost of the utilities outstanding. As at January 31, $450 is owing and unpaid. These costs will be due on February 12.

-Purchased a dental chair for $125,000, paying $20,000 in cash and signing a $105,000 3-year note payable for the balance. The note payable has a 6% interest rate and monthly interest payments are due on the first day of the following month.

-An independent lab creates dental appliances based on moulds. Hernandez has not yet received an invoice but the quote for the work already completed was $3,170 for lab fees in January.

-Unpaid janitorial service costs were $230.

-The dental assistant and the receptionist are paid each Wednesday. The weekly payroll is $2,000. Salaries were last paid on January 27, which provides payment up to and including January 27. Salaries are still owing for Thursday, January 28 and Friday, January 29.

-Hernandez had an empty business office in his dental clinic that he rented out to a business consultant for $300/month. The lease was signed on January 15, the date the tenant took occupancy, and the tenant promised to pay the January amount outstanding on February 1.

Required -

Journalize the adjusting entries at December 31.

Explain two generally accepted accounting principles that relate to adjusting the accounts.