The Davis Clinic provides dental care services. During 2013, the clinic entered into the following transactions:
1) On October 1, collected $3,000 in advance of services being provided. The services are to be performed equally over the next 12 months.
2) On April 1, purchased insurance costing $18,000. The insurance policy would cover the next 12 months.
Required:
a) Draw T-accounts and post the year end adjusting entries to appropriate T-accounts.
b) Analyze how the year end adjusting entries affect the Financial Statements on the horizontal financial model below.

Question

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The Answer of The Davis Clinic provides dental care services. During 2013, the clinic entered into the following transactions:
1) On October 1, collected $3,000 in advance of services being provided. The services are to be performed equally over the next 12 months.
2) On April 1, purchased insurance costing $18,000. The insurance policy would cover the next 12 months.
Required:
a) Draw T-accounts and post the year end adjusting entries to appropriate T-accounts.
b) Analyze how the year end adjusting entries affect the Financial Statements on the horizontal financial model below.

The Davis Clinic Provides Dental Care Services