Question

Terry Mason organized The Fifth Season at the beginning of February 20Y4. During February, The Fifth Season entered into the following transactions:

Terry Mason invested $15,000 in The Fifth Season in exchange for common stock.

Paid $2,700 on February 1 for an insurance premium on a 1-year policy.

Purchased supplies on account, $900.

Received fees of $28,500 during February.

Paid expenses as follows: wages, $10,800; rent, $3,200; utilities, $1,400; and miscellaneous, $1,600.

Paid dividends of $4,000.

The transactions above have already been recorded in the integrated financial statement framework below.

Record the adjusting entries at the end of February to record the insurance expense and supplies expense. There was $150 of supplies on hand as of February 28. Identify the adjusting entry for insurance as (a1) and supplies as (a2). Use the integrated financial statement framework below. After each transaction, enter a balance for each item. If an amount box does not require an entry, leave it blank. Enter account decreases as negative amounts.

Statement of Cash Flows

Balance Sheet

Assets

=

Liabilities

+

Stockholders' Equity

Cash

+

Supplies

+

Prepaid Insurance

=

Accounts Payable

+

Common Stock

+

Retained Earnings

a. Investment

b. Paid insurance

Balances

c. Purchased supplies

Balances

d. Fees earned

Balances

e. Paid expenses

–17,000

–17,000

Balances

23,800

900

2,700

900

15,000

11,500

f. Paid dividends

-4,000

-4,000

Balances

19,800

900

2,700

900

15,000

7,500

a1.

Balances

a2.

Balances, February 28

Statement of Cash Flows

Income Statement

a. Financing

d. Fees earned

b. Operating

e. Wages expense

d. Operating

e. Rent expense

e. Operating

e. Utilities expense

f. Financing

e. Miscellaneous expense

Increase in cash

a1.

a2.

$

Answer 1