TRANSACTIONS FOR FEBRUARY 2020

Feb. 01 Bills Wear purchases 200 T-shirts at $4 each. They are purchased on credit.

Feb. 05 Bill 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. 14 Bill 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. 23 Bills Wear sells 185 T-shirts for $10 each. 170 of these were sold for cash and the remaining 15 were sold on credit.

Feb. 28 Bills Wear declares and pays a dividend of $100.

End of Month Adjustments

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

Required:

1. Record transactions in terms of the accounting equation and debits and credits. (See below)
2. Post the entries to the General Ledger. Make sure to carry over the ending balances of January.
3. Create a Trial Balance.
4. Prepare the Income Statement, Statement of Retained Earnings, the Balance Sheet.