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

1. Terry Mason invested $15,000 in The Fifth Season in exchange for common stock.
2. Paid $2,700 on February 1 for an insurance premium on a 1-year policy.
3. Purchased supplies on account, $900.
4. Received fees of $28,500 during February.
5. Paid expenses as follows: wages, $10,800; rent, $3,200; utilities, $1,400; and miscellaneous, $1,600.
6. Paid dividends of $4,000.

There was $150 of supplies on hand as of February 28.

Statement of Cash Flows	Balance Sheet
	Assets					=	Liabilities	+	Stockholders' Equity
	Cash	+	Supplies	+	Prepaid Insurance	=	Accounts Payable	+	Common Stock	+	Retained Earnings
a. Investment	15,000								15,000
b. Paid insurance	–2,700				2,700
Balances	12,300				2,700				15,000
c. Purchased supplies			900				900
Balances	12,300		900		2,700		900		15,000
d. Fees earned	28,500										28,500
Balances	40,800		900		2,700		900		15,000		28,500
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. Insurance expense					-225						-225
Balances	19,800		900		2,475		900		15,000		7,275
a2. Supplies expense			-750								-750
Balances, February 28	19,800		150		2,475		900		15,000		6,525
Statement of Cash Flows									Income Statement
a. Financing	$15,000								d. Fees earned			$28,500
b. Operating	-2,700								e. Wages expense			-10,800
d. Operating	28,500								e. Rent expense			-3,200
e. Operating	-17,000								e. Utilities expense			-1,400
f. Financing	-4,000								e. Miscellaneous expense			-1,600
Increase in cash	$19,800								a1. Insurance			-225
									a2. Supplies expense			-750
									Net income			$10,525

Prepare an income statement for February.

The Fifth Season
Income Statement
For the Month Ended February 28, 20Y4
Fees earned		$
Operating expenses:
Wages expense	$
Rent expense
Utilities expense
Supplies expense
Insurance expense
Miscellaneous expense
Total expenses
Net income		$

Answer rating: 100% (QA)

The Fifth Season Income Statement For the Month Ended February 28 20Y4 Fees earned 28500 Operating e... View the full answer