Terry Mason invested $33,750 in The Fifth Season in exchange for common stock. P

Question

Terry Mason invested $33,750 in The Fifth Season in exchange for common stock.

Paid $7,140 on February 1 for an insurance premium on a 1-year policy.

Purchased supplies on account, $2,100.

Received fees of $60,575 during February.

Paid expenses as follows: wages, $20,400; rent, $3,400; utilities, $1,700; and miscellaneous, $1,870.

Paid dividends of $8,310.

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 $1,890 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. If required, round your answer to the nearest dollar. Enter account decreases as negative amounts.

Explanation / Answer

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Adjusting Entries: a1 Insurance Insurance is for one year i.e. 12 months $ 7140. Amount for one month (February) 7140/12 $595 Entry will be: Insurance Expense Debit $595 Prepaid Insurance Credit $595 a2 Supplies Supplies Purchased $2,100 Less: Supplies in hand $1,890 Supplies Consumed $210 Entry will be: Supply Expense Debit $210 Supplies Credit $210 Cash Supplies Prepaid Insurance Accounts Payable Common Stock Retained Earning Balances 51505 2100 7140 2100 33750 24895 a1. Insurance Expense -595 -595 Balances 51505 2100 6545 2100 33750 24300 a2. Supplies Expense -210 -210 Balances Feb 28 51505 1890 6545 2100 33750 24090

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