Reference no: EM132584373

Roadside Travel Court was organized on July 1, 2016, by Betty Johnson. Betty is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Betty prepared the following income statement for her fourth quarter, which ended June 30, 2017.

ROADSIDE TRAVEL COURT

Income Statement

For the Quarter Ended June 30, 2017

Revenues

Rent revenue                       $220,400

Operating expenses 

Advertising expense                 $ 3,885

Salaries and wages expense       84,105

Utilities expense                             940

Depreciation expense                     3,105

Maintenance and repairs expense        4,465

Total operating expenses                  96,500

Net income                                    $123,900

• Betty suspected that something was wrong with the statement because net income had never exceeded $30,000 in any one quarter. Knowing that you are an experienced accountant, she asks you to review the income statement and other data.
• You first look at the trial balance. In addition to the account balances reported above in the income statement, the trial balance contains the following additional selected balances at June 30, 2017.

Supplies$ 9,080

Prepaid Insurance14,400

Notes Payable14,000

You then make inquiries and discover the following.

1. Roadside rentals revenues include advanced rental payments received for summer occupancy, in the amount of $57,805.

2. There were $1,860 of supplies on hand at June 30.

3. Prepaid insurance resulted from the payment of a one-year policy on April 1, 2017.

4. The mail in July 2017 brought the following bills: advertising for the week of June 24, $130; repairs made June 18, $4,470; and utilities for the month of June, $255.

5. Wages expense is $330 per day. At June 30, four days' wages have been incurred but not paid.

6. The note payable is a 6% note dated May 1, 2017, and due on July 31, 2017.

7. Income tax of $13,915 for the quarter is due in July but has not yet been recorded.

Question 1: Show any adjusting journal entries required at June 30, 2017. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)