Comprehensive Accounting Cycle Problem: Suppose that Sit Down Inc. is a retailer which began operations on February 1^st, 2018. During February, the following transactions occurred:

On 2/1/2018 issued 17,000 shares of common stock for $17,000 cash.

On 2/1/2018 borrowed $16,000 from the bank. The note payable is due in 4 years and has a 7% annual interest rate.

On 2/1/2018, purchased a truck for $19,000, for $5,000 in cash and $14,000 on account.

On 2/4/2018, purchased inventory for $24,290 on account.

On 2/5/2018, paid $3,000 cash for a 6-month insurance policy effective February 1^st July 31^st.

On 2/11/2018, sold inventory, costing $17,930, to customers for $25,400 on account. Customers were billed for these goods on the same day.

On 2/16/2018, paid $11,320 in cash to creditors on amounts owed from transactions c and d.

On 2/20/2018, paid $2,800 cash for employee wages.

On 2/25/2018, collected $11,470 from customers billed on February 11^th.

On 2/28/2018, declared and paid $635 cash dividend.

PART 1 Record February transactions using Journal Entries (1pt): Record all of the above transactions for February using journal entries. Assume Sit Down, Inc. uses the following accounts: Cash, A/R, Inventory, Prepaid Insurance, Equipment, Accumulated Depreciation--Equipment, A/P, Wages payable, Interest payable, Notes payable, Common Stock, Retained Earnings, Dividends, Sales revenue, COGS, Depreciation expense, Insurance expense, Interest expense, and Wages expense.

PART 2 Post transactions to T-Accounts (1pt): Post all of the above transactions to T-Accounts. Assume the opening balance in each of the accounts is zero ($0).

PART 3 Prepare an unadjusted trial balance (1pt): After calculating the ending balance in each T-account in part 2, prepare an unadjusted trial balance for Sit Down, Inc. as of February 28^th, 2018 with the list of accounts in the following order: assets, liabilities, common stock, retained earnings, revenues, and expenses.

PART 4 Record adjusting entries (1pt): Record adjusting entries for all of the below events using adjusting journal entries (AJEs):

AJE1: The truck from transaction c. above has an expected useful life of 5 years and will have no resale or value at the end of its life. Assume Sit Down, Inc. uses straight-line depreciation (i.e. the asset depreciates evenly) over the expected life of the truck.

AJE2: One month of interest from the note payable in transaction b. has accrued.

AJE3: One month of the insurance policy in transaction e. above has been used.

AJE4: Sit Down, Inc. pays wages of $2,800 to its workers every two weeks (i.e. every 14 days). Workers were paid $2,800 for two weeks worth of work on February 20^th (see transaction h.) and they will next be paid $2,800 on March 6^th.