Question

The Moto Hotel opened for business on May 1, 2022. Here is its trial balance before adjustment on May 31.

MOTO HOTEL Trial Balance May 31,2022

	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. (a) Annual depreciation is $3,600 on the building.

(b) Annual depreciation is $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 .

Answer 1

Adjusting Entries: No. Credit Debit $450 $450 $1,550 ($2600 - $1050] $1,550 $300 ($3600 x (1/12) --> One month's depreciation] $300 Date Account Titles and Explanation May. 31 Insurance Expense Prepaid Insurance May. 31 Supplies Expense Supplies May. 31 Depreciation Expense Accum. Dep. - Buildings Depreciation Expense Accum. Dep. - Equipment May. 31 Interest Expense Interest Payable May. 31 Unearned Rent Revenue Rent Revenue May. 31 Salaries and Wages Expense Salaries and Wages Payable $250 ($3000 x (1/12) -->One month's depreciation] $250 $180 $180 ($36000 x (1/12) --> One month's interest is accrued] $2,500 $2,500 6) $900 $900 General Ledger Accounts: Cash $2,500 5/31 Supplies $2,600 $1,550 $1,050 5/31 5/31 5/31 5/31 Prepaid Insurance $1,800 $450 $1,350 5/31 5/31

Land $15,000 Buildings $70,000 5/31 5/31 Equipment $16,800 5/31 Accumulated Depreciation-Buildings Accumulated Depreciation-Equipment $250 Accounts Payable $4,700 $300 5/31 5/31 5/31 Unearned Rent Revenue $2,500 $3,300 $800 Salaries and Wages Payable $900 Interest Payable $180 5/31 5/31 5/31 5/31 5/31 Mortgage Payable $36,000 Common Stock $60,000 5/31 5/31 Rent Revenue $9,000 $2,500 $11,500 5/31 5/31 5/31 Utilities Expense $800 5/31 Interest Expense $180 5/31 5/31 5/31 5/31 Salaries and Wages Expense $3,000 $900 $3,900 Advertising Expense $500 5/31 Insurance Expense $450 5/31 Supplies Expense $1,550 21 Depreciation Expense $300 $250 $550 5/31 5/31 5/31 5/31

Credit $11,500 MOTO HOTEL Adjusted Trial Balance May 31, 2022 Account Titles Debit Cash $2,500 Supplies $1,050 Prepaid Insurance $1,350 Land $15,000 Buildings $70,000 Equipment $16,800 Accumulated Dep.-Buildings Accumulated Dep.-Equip. Accounts Payable Unearned Rent Revenue Salaries and Wages Payable Interest Payable Mortgage Payable Common Stock Rent Revenue Salaries and Wages Expense $3,900 Supplies Expense $1,550 Depreciation Expense $550 Utilities Expense $800 Advertising Expense $500 Insurance Expense $450 Interest Expense $180 Totals $114,630 MOTO HOTEL Income Statement For the Month Ended April 30 Revenues: Rent Revenue Expenses: Salaries and Wages Expense $3,900 Supplies Expense $1,550 Depreciation Expense $550 Utilities Expense $800 Advertising Expense $500 Insurance Expense $450 Interest Expense $180 Total Expenses Net Income $300 $250 $4,700 $800 $900 $180 $36,000 $60,000 $11,500 $7,930 $3,570 $0 MOTO HOTEL Statement of Retained Earnings For the Month Ended April 30 Retained Earnings - Beginning Balance Add: Net Income $3,570 Less: Dividends Net increase in retained earnings Retained Earnings - Ending Balance [Ref: Income Statement] $0 $3,570 $3,570 $114,630

$2,500 $1,050 $1,350 Assets Current Assets: Cash Supplies Prepaid Insurance Total Current Assets Property, plant and Equipment: Land Buildings $70,000 Accum. Dep. - Buildings $300 Equipment $16,800 Accum. Dep. - Equip. $250 Property, Plant and Equipment, Net MOTO HOTEL Balance Sheet May 31 Liabilities & Shareholders' Equity Current Liabilities: Accounts Payable $4,700 Unearned Rent Revenue $800 Salaries and Wages Payable $900 $4,900 Interest Payable $180 Total Current Liabilities Long-Term Liabilities: Mortgage Payable Total Liabilities Shareholders' Equity: Common Stock $60,000 $101,250 Retained Earnings $3,570 Shareholders' Equity $106,150 Total Liabilities & Shareholders' equity $6,580 $15,000 $36,000 $42,580 $69,700 $16,550 [Ref: Statement of Retained Earnings) $63,570 $106,150 Total Assets