Bills Wear February Transactions Assignment

TRANSACTIONS FOR FEBRUARY 2020

Feb. 01Bills Wear purchases 200 T-shirts at $4 each. They are purchased on credit. Feb. 05Bill hires a company to advertise his business. The total cost is $150. Bill pays $100 cash at the time of the service and will pay the remaining $50 later. Feb. 14Bill decides to get insurance for his business. On February 14, Bills Wear pays $150 for 3 months of insurance, with coverage beginning on the date of payment. Feb. 23Bills Wear sells 185 T-shirts for $10 each. 170 of these were sold for cash and the remaining 15 were sold on credit. Feb. 28Bills Wear declares and pays a dividend of $100.

End of Month Adjustments Part of the insurance cost, from the 14th through the 28th, has been usedapparently to generate revenue. Therefore, we should expense $25 of the total insurance cost; that is $25 = $150 x 1/6th, where 1/6th = 15 days/ 90 days.

Required: 1. Record transactions in terms of the accounting equation. (See below) 2. Prepare the Income Statement, Statement of Retained Earnings, and the Balance Sheet.

DateAssets =Liabilities +Owners Equity +revs & stock -exp & dividends