Question 2d)

Question 2 (40 marks) Clown Around, Inc., provides party entertainment for children of all ages. The following is the company's trial balance dated February 1, current year. CLOWN AROUND, INC. TRIAL BALANCE FEBRUARY 1, CURRENT YEAR $3,420 1,080 $ 960 2.400 900 Cash Accounts receivable Accounts payable Capital stock Retained earnings Dividends Party revenue Salaries expense Party food expense Travel expense 1,620 996 288 96 $5,880 $5.880 Clown Around engaged in the following transactions in February Feb. 2 Paid $900 in partial settlement of the outstanding account payable reported in the trial balance dated February 1. Feb. 6 Collected $1,080 in full settlement of the outstanding accounts receivable reported in the trial balance dated February 1. Feb. 18 Billed Sunflower Child Care $210 for clown services. The entire amount is due March 15. Feb. 26 Billed and collected $576 for performing at several birthday parties. Feb. 28 Paid clown salaries of $312 for work done in February Feb. 28 Recorded and paid $48 for travel expenses incurred in February Feb. 28 Declared and paid a $120 dividend to Ralph Jaschob, the company's only shareholder. Required: a. Record the company's February transactions in general journal format. (14 marks) b. Prepare a trial balance dated February 28, current year. For the above, the Party food expense opening balance should be $288 instead of $28. (14 marks) c. Will the $120 dividend paid on February 28 decrease the company's income? Explain. (4 marks) d. Using figures from the trial balance prepared in part (b) above, compute total assets, total liabilities and total equity. Did February appear to be a profitable month? (8 marks)