Reference no: EM132406885

Assignment

The Skyline Motel opened for business on May 1, 2014. Its trial balance before adjustment on May 31 is as follows

Account #		Debit	Credit
101	Cash
126	Supplies	$ 3,5001 2,080
130	Prepaid Insurance	2,400
140	Land	12,000
141	Buildings	60,000
149	Equipment	15,000
201	Accounts Payable		$ 4,800
208	Unearned Rent Revenue		3,300
275	Mortgage Payable		40,000
301	Share Capital		42,000
320	Dividends	620
429	Rent Revenue		10,300
610	Advertising Expense	600
726	Salaries and Wages Expense	3,300
732	Utilities Expense	900
		$100.400	$100.400

In addition to those accounts listed on the trial balance, the chart of accounts for Skyline Motel also contain the following accounts and account numbers: No. 142 Accumulated Depreciation-Buildings, No. 150 Accumulated Depreciation-Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 619 Depreciation expense, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

Other Data:

1. Prepaid insurance is a one-year policy starting May 1, 2014.

2. A count of supplies shows $750 of unused supplies on May 31.

3. Annual depreciation is $3,000 on the buildings and $1,500 on equipment.

4. The mortgage interest rate is 12%. (The mortgage was taken out on May 1)

5. Two-thirds of the unearned rent revenue has been earned.

6. Salaries of $750 are accrued and unpaid at May 31.

Instructions

(a) Journalize the adjusting entries on May 31.

(b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Use 11 as the posting reference).

(c) Prepare an adjusted trial balance on May 31.

(d) Prepare an income statement and a retained earnings statement for the month of May and a balance sheet at May 31.