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Adjustment Process Terry Mason organized The Fifth Season at the beginning of February 2014. During February, The Fifth Season entered into the following transactions: a. Terry Mason invested $26.000 in The Fifth Season in exchange for common stock. b. Pald $7.140 on February i for an insurance premium on a 1-year policy. C. Purchased supplies on account, $1,560. d. Received fees of $57.900 during February. e. Pald expenses as follows: wages, $16,800; rent, $2,800; utilities, $1,400; and miscellaneous, $1,540. f. Pald dividends of $9.390. The transactions above have already been recorded in the integrated financial statement framework below. ent, ' ssurance premiun exchange force Record the adjusting entries at the end of February to record the insurance expense and supplies expense. There was $1,404 of supplies on hand as of February 28. Identify the adjusting entry for insurance as (al) 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. Assets + Statement of Cash Flows Balance Sheet = Liabilities Accounts Payable Stockholders' Equity Common Retained Stock Earnings Cash Prepaid Insurance + Supplies + 26,000 26,000 a. Investment b. Paid Insurance -7,140 7,140 7,140 Balances 18,860 26,000 c. Purchased supplies 1,560 1,560 Balances 18,860 1,560 7,140 1,560 26,000 d. Fees earned 1,560 7,140 1,560 26,000 Balances e. Paid expenses 57,900 76,760 -22,540 54,220 -9,390 44,830 57,900 57,900 -22,540 35,360 -9,390 25,970 Balances 1,560 7,140 1,560 26,000 f. Paid dividends Balances 1,560 7,140 1,560 26,000 Balances Balances, February 28

Answer 1

Assets Liabilities Equity Statement of Cash Flows Prepaid Accounts Common Retained Cash Supplies Insurance Payables Stock Earnings a. Investment b. Paid insurance $ $ $ $ 26,000 26,000 $ 7,140 7,140 (7,140) 18,860 $ 26,000 Balances $ = c. Purchased Supplies 1,560 1,560 1,560 +$ Balances 18,860 57,900 +$ 7,140 1,560 26,000 d. Fees Earned 57,900 57,900 (22,540) $ Balances 76,760 1,560 7,140 1,560 26,000 + e. Paid Expenses (22,540) 54,220 $ 1,560 $ $ 35,360 Balances 7,140 1,560 26,000 f. Paid Dividends $ (9,390) 25,970 (595) 25,375 (156) 25,219 (9,390) 44,830 $ 7,140 (595) 6,545 $ 26,000 Balances 1,560 1,560 a1. Insurance Expense $ Balances 1,560 26,000 44,830 1,560 (156) 1,404 $ a2. Supplies Expense Balances, February 28 44,830 $ $ 6,545 $ 1,560 26,000 Statement of Cash Flows: Income Statement: a. Financing b. Operating d. Operating e. Operating f. Financing $ $ $ 26,000 d. Fees Earned 57,900 $ (7,140) 57,900 e. Wages Expenses e. Rent Expenses e. Utilities Expenses e. Miscellanoeus Expenses a1. Insurance Expense (16,800) (2,800) (1,400) (1,540) (595) (156) 34,609 $ $ $ $ (22,540) (9,390) 44,830 $ $ $ $ Total a2. Supplies Expense Net Income Explanation a1. Insurance amount of $ 7,140 is for 12 months. But as of February 28, only 1 month is expired. So, the Insurance Expense is $7,140 12 * 1 $ 565 a2. Supplies On Hand as on February 28 is $ 1,404 and at beginning, it is $ 1,560; which means the difference amount of $ 156 is used and hence charged to supplies Expense.