E $3-1$ Transactions using accrual accounting

Obj. $2$

Terry Mason organized The Fifth Season at the beginning of February $20$Y$4.$ 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.$

Record the preceding transactions using the integrated financial statement framework. After each transaction, you should enter a balance for each item.

E $3-2$ Adjustment process

Obj. $3$

Using the data from Exercise $3-1,$ 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 $($a$1)$ and supplies as $($a$2).$

E $3-3$ Financial statements

Obj. $4$

Using the data from Exercises $3-1$ and $3-2,$ prepare financial statements for February, including income statement, statement of stockholders' equity, balance sheet, and statement of cash flows.

Net income, $$10,525$