1. Adjustment Process

   Alex Vera organized Succulent Express at the beginning of February 20Y4. During February, Succulent Express entered into the following transactions:

   1. Terry Mason invested $30,000 in Succulent Express in exchange for common stock.
   2. Paid $5,400 on February 1 for an insurance premium on a one-year policy.
   3. Purchased supplies on account, $1,800.
   4. Received fees of $57,000 during February.
   5. Paid expenses as follows: wages, $21,600; rent, $6,400; utilities, $2,800; and miscellaneous, $3,200.
   6. Paid dividends of $8,000.

   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 $300 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. Enter account decreases as negative amounts using the minus sign.

   Financial Statement Effects

   Balance Sheet

   Assets

   =

   Liabilities

   +

   Stockholders' Equity

   Cash

   +

   Supplies

   +

   Prepaid Insurance

   =

   Accounts Payable

   +

   Common Stock

   +

   Retained Earnings

   a.

   Investment

   30,000

   30,000

   b.

   Paid insurance

   (5,400)

   5,400

   Balances

   24,600

   5,400

   30,000

   c.

   Purchased supplies

   1,800

   1,800

   Balances

   24,600

   1,800

   5,400

   1,800

   30,000

   d.

   Fees earned

   57,000

   57,000

   Balances

   81,600

   1,800

   5,400

   1,800

   30,000

   57,000

   e.

   Paid expenses

   (34,000)

   (34,000)

   Balances

   47,600

   1,800

   5,400

   1,800

   30,000

   23,000

   f.

   Paid dividends

   (8,000)

   (8,000)

   Balances

   39,600

   1,800

   5,400

   1,800

   30,000

   15,000

   a1.

   Insurance expense

   fill in the blank 2

   fill in the blank 3

   fill in the blank 4

   fill in the blank 5

   fill in the blank 6

   fill in the blank 7

   Balances

   fill in the blank 8

   fill in the blank 9

   fill in the blank 10

   fill in the blank 11

   fill in the blank 12

   fill in the blank 13

   a2.

   Supplies expense

   fill in the blank 15

   fill in the blank 16

   fill in the blank 17

   fill in the blank 18

   fill in the blank 19

   fill in the blank 20

   Balances, February 28

   fill in the blank 21

   fill in the blank 22

   fill in the blank 23

   fill in the blank 24

   fill in the blank 25

   fill in the blank 26

   Statement of Cash Flows

   Income Statement

   a.

   Financing

   $30,000

   d.

   Fees earned

   $57,000

   b.

   Operating

   (5,400)

   e.

   Wages expense

   (21,600)

   d.

   Operating

   57,000

   e.

   Rent expense

   (6,400)

   e.

   Operating

   (34,000)

   e.

   Utilities expense

   (2,800)

   f.

   Financing

   (8,000)

   e.

   Miscellaneous expense

   (3,200)

   Increase in cash

   $39,600

   a1.

   Insurance expense

   fill in the blank 28

   a2.

   Supplies expense

   fill in the blank 30

   Net income

   $fill in the blank 32