Problem 1: The Solo Hotel opened for business on May 1, 2014. Here is its trail balance before adjustment on May 31.
Solo Hotel
Trial Balance
May 31, 2014
|
|
Debit
|
Credit
|
|
Cash
|
$2,500
|
|
|
Supplies
|
2,600
|
|
|
Prepaid Insurance
|
1,800
|
|
|
Land
|
15,000
|
|
|
Buildings
|
70,000
|
|
|
Equipment
|
16,800
|
|
|
Accounts Payable
|
|
$4,700
|
|
Unearned Rent Revenue
|
|
3,300
|
|
Mortgage Payable
|
|
36,000
|
|
Common Stock
|
|
60,000
|
|
Rent Revenue
|
|
9,000
|
|
Salaries And Wages Expense
|
3,000
|
|
|
Utilities Expense
|
800
|
|
|
Advertising Expense
|
500
|
|
|
|
$113,000
|
$113,000
|
Other data:
1. Insurance expires at the rate of $450 per month.
2. A count of supplies shows $1,050 of unused supplies on May 31.
3. Annual depreciation is $3,600on the buildings and $3,000 on equipment.
4. The mortgage interest rate is 6% (The mortgage was taken out on May 1.)
5. Unearned rent of $2,500 has been earned.
6. Salaries of $900 are accrued and unpaid at May 31.
Instructions:
a. Journalize the adjusting entries on May 31.
b. Prepare a ledger using T-accounts. Enter the trial balance amounts and post the adjusting entries.
c. Prepare an adjusting trial balance on May 31.
d. Prepare an income statement and a retained earnings statement for the month of May and a classified balance sheet at May 31.
e. Identify which accounts should be closed on May 31.