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Transactions Using Accrual Accounting Terry Mason organized The Fith Season at the beginning of February 20Y4. During February, The Fifth Seeson entered into the following transaction:s a. Terry Mason invested $33,000 in The Fifth Season in exchange for common stock. b. Paid $6,930 on February 1 for an insurance premium on a 1-ycar policy Purchased supplies on account, $2.460 Received fees of $62,180 during Febr aid expenses as follows: wages, $18,600; rent, $3,100; utlities, $1,SS0; and miscellaneous, $1,705 Paid dividends of $9,525 Record the preceding transactions using the integrated financial statement framework. After each transaction, enter a balance for each item. If an amount box does not require an entry, leave it blank, Enter account decreases and net cash outflows as negative Balance Sheet of Cash +Stockholders\' Equity Statement of Cash Flows

Solution

Assets =

Liabilities +

Equity

Cash

Supplies

Prepaid Insurance

Accounts Payable

Common Stock

Retained earnings

a

$   33,000.00

$           33,000.00

b

$   (6,930.00)

$ 6,930.00

Balance

$   26,070.00

$               -  

$ 6,930.00

$                                -  

$           33,000.00

$                                  -  

c

$ 2,460.00

$                   2,460.00

Balance

$   26,070.00

$ 2,460.00

$ 6,930.00

$                   2,460.00

$           33,000.00

$                                  -  

d

$   62,180.00

$                  62,180.00

Balance

$   88,250.00

$ 2,460.00

$ 6,930.00

$                   2,460.00

$           33,000.00

$                  62,180.00

e

$ (24,955.00)

$                (24,955.00)

Balance

$   63,295.00

$ 2,460.00

$ 6,930.00

$                   2,460.00

$           33,000.00

$                  37,225.00

f

$   (9,525.00)

$                  (9,525.00)

Balance

$   53,770.00

$ 2,460.00

$ 6,930.00

$                   2,460.00

$           33,000.00

$                  27,700.00

Note* Dividends paid Decreases retained earnings hence shown as negative value.

Statement of cash Flow

a

Common Stock

$   33,000.00

b

Prepaid Insurance

$   (6,930.00)

d

Revenue

$   62,180.00

e

Expenses

$ (24,955.00)

f

Dividends

$   (9,525.00)

Balance Cash

$   53,770.00

Income Statement

d

Revenue

$           62,180.00

e

Wages

$         (18,600.00)

e

Rent

$           (3,100.00)

e

Utilities

$           (1,550.00)

e

Miscellaneous Expense

$           (1,705.00)

Balance

$           37,225.00

	Assets =	Liabilities +	Equity
	Cash	Supplies	Prepaid Insurance	Accounts Payable		Common Stock	Retained earnings
a	$   33,000.00					$           33,000.00
b	$   (6,930.00)		$ 6,930.00
Balance	$   26,070.00	$               -	$ 6,930.00	$                                -		$           33,000.00	$                                  -
c		$ 2,460.00		$                   2,460.00
Balance	$   26,070.00	$ 2,460.00	$ 6,930.00	$                   2,460.00		$           33,000.00	$                                  -
d	$   62,180.00						$                  62,180.00
Balance	$   88,250.00	$ 2,460.00	$ 6,930.00	$                   2,460.00		$           33,000.00	$                  62,180.00
e	$ (24,955.00)						$                (24,955.00)
Balance	$   63,295.00	$ 2,460.00	$ 6,930.00	$                   2,460.00		$           33,000.00	$                  37,225.00
f	$   (9,525.00)						$                  (9,525.00)
Balance	$   53,770.00	$ 2,460.00	$ 6,930.00	$                   2,460.00		$           33,000.00	$                  27,700.00