Reference no: EM131691660

Question: (Analyzing transactions on a work sheet) Dr. Harlan Elliott opened a magnetic resonance imaging (MRI) facility, to be known as Harlan MRI. The following transactions took place during his first month of operation. Analyze these transactions on a work sheet similar to that illustrated in the text. You will need columns for Cash, Accounts receivable, Supplies inventory, Prepaid rent, Equipment, Notes payable, Accounts payable, Withholding taxes payable, and H. Elliott, Capital.

1. Dr. Elliott invested $80,000 in the business.

2. He purchased MRI equipment from the manufacturer for $1,800,000. To pay for the equipment, Harlan gave the manufacturer a note. He was required to repay the note in five annual payments of $360,000 each, together with interest of 6 percent a year on the unpaid balance.

3. He purchased supplies for $25,000 on credit. The supplies were received and put in inventory.

4. At the beginning of the month, he paid rent in the amount of $3,000.

5. He paid the bill for supplies in the amount of $25,000.

6. During the month, he incurred technician salaries of $12,000. Of this amount, he paid $11,000 in cash to employees. He withheld the other $1,000 from their salaries for taxes, which he will pay the government next month.

7. He billed his patients in the amount of $40,000 for MRI services.

8. On receiving the bills, the patients paid Dr. Elliott a total of $35,000.

9. During the month, he paid bills amounting to $4,000 for utility services.

10. He took inventory of the supplies and found that he had consumed $2,000 of those supplies in the course of the month's activities.