Question

Practice Problem 1 Sunland's Motel opened for business on May 1, 2020. Its trial balance before adjustment on May 31 is as follows. SUNLAND'S MOTEL Trial Balance May 31, 2020 Account Number Debit 126 $3/600 2,050 1.800 14 000 61.00 15.600 Supplies Prepaid Insurance Land Buildings Equipment Accounts Payable Uneamed Rent Revenue Mortgage Payable Owner's Capital Rent Revenue Advertising Expense Salaries and Wages Expense Utilities Expense $4.00 3,000 40.000 41.200 14.650 650 610 726 732 $103,750 $103.7 In addition to those accounts listed on the trial balance, the chart of accounts for Hank's Hotel also contains 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 1-year policy starting May 1, 2020. 2. A count of supplies shows $800 of unused supplies on May 31. Annual depreciation is $3,708 on the buildings and $1,560 on equipment. 4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.) S Two-thirds of the unearned rent revenue has been earned. 6 Salaries of $700 are accrued and unpaid at May 31. Journalize the adjusting entries on May 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Ne Dule A n d Explaine

Answer 1

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Due to character limit I am attaching the image from ledger to Balance Sheet Unearned Rent Revenue Ref. Debit Credit Date Explanation May 31 Balance May 31 Adjusting Balance 3,000.00 1,000.00 2,000.00 Mortgage Payable Ref. Debit Credit Date Explanation May 31 Balance Balance 40,000.00 Interest payable Ref. Debit Date Explanation May 31 Adjusting Credit 200.00 Balance 200.00 Owner's Equity Ref. Debit Credit Date Explanation May 31 Balance Balance 41,200.00 Rent Revenue Ref. Debit Date Explanation May 31 Balance May 31 Adjusting Credit Balance | 14,650.00 ####### 16,650.00 Advertising Expense Ref. Debit Credit Date Explanation May 31 Balance Balance 650.00 Salaries and Wages expense Debit Ref. Credit Date Explanation May 31 Balance May 31 Adjusting Balance 3,400.00 4,100.00 700.00 Utilities expense Ref. Debit Credit Date Explanation May 31 Balance Balance 850.00 Insurance expense Ref. Debit 150.00 Date Explanation May 31 Adjusting Credit Balance 150.00 Supplies Expense Ref. 1,250.00 Date Explanation May 31 Adjusting Credit Balance 1,250.00 Depreciation expense Ref. Debit 5,268.00 Date Explanation May 31 Adjusting Credit Balance 5,268.00 Ref. Interest Expense Debit 200.00 Date Explanation May 31 Adjusting Credit Balance 200.00 Credit $ 3,708.00 1,560.00 Adjusted Trial Balance Account Titles Debit $ Cash 3,600.00 Supplies 800.00 Prepaid Insurance 1,650.00 Land 14,000.00 Buildings 61,800.00 Accumulated Depreciation-Buildings Equipment 15,600.00 Accumulated Depreciation- Equipment Accounts Payable Salaries and Wages payable Unearned Rent Revenue Mortgage Payable Interest payable Owner's Equity Rent Revenue Advertising Expense 650.00 Salaries and Wages expens 4,100.00 Utilities expense 850.00 Insurance expense 150.00 Supplies Expense 1,250.00 Depreciation expense 5,268.00 Interest Expense 200.00 Total 109,918.00 4,900.00 700.00 1,000.00 40,000.00 200.00 41,200.00 16,650.00 109,918.00 Amount $ 16,650.00 Income Statement Rent Revenue Less: Advertising Expense Salaries and Wages expense Utilities expense Insurance expense Supplies Expense Depreciation expense Interest Expense Net Income 650.00 4,100.00 850.00 150.00 1,250.00 5,268.00 200.00 4,182.00 Statement of Owner's Equity Owner's Equity- Opening Balance Add: Net Income Owner's Equity-Closing Balance Amount $ 41,200.00 4,182.00 45,382.00 Amount $ 3,600.00 800.00 1,650.00 6,050.00 Balance Sheet Assets Current Assets Cash Supplies Prepaid Insurance Total Current Assets Fixed Assets Land Buildings Accumulated Depreciation-Buildings Equipment Accumulated Depreciation-Equipment Total Fixed Assets Total Assets 14,000.00 61,800.00 (3,708.00) 15,600.00 (1,560.00)| 86,132.00 92,182.00 Amount $ Liabilities & Stockholders' Equity Liabilities Current Liabilities Unearned Rent Revenue Accounts Payable Interest Payable Salaries and Wages payable Total Current Liabilities Long Term Liabilities Mortgage Payable Total Long Term Liabilities Total Liabilities Owner's Equity Owner's Equity Total Liabilities & Owner's Equity 1,000.00 4,900.00 200.00 700.00 6,800.00 40,000.00 40,000.00 46,800.00 45,382.00 45,382.00 92,182.00 .

Sunland Motel

First we will calculate adjustment amount. Then we will make adjustment entries.

1	Prepaid Insurance	1,800.00
	Paid for (months)	12.00
	Insurance expense	150.00
2	Supplies Balance	2,050.00
	Less: Unused Supplies	800.00
	Supplies expense	1,250.00
3	Deprecation Expense- Building	3,708.00
	Deprecation Expense- Equipment	1,560.00
4	Mortgage Payable	40,000.00
	Interest rate	6%
	Annual Interest	2,400.00
	Interest Expense	200.00
5	Unearned Rent revenue	3,000.00
	Rent earned (2/3)	2,000.00
6	Salary and Wages Payable	700.00

Adjusting Entries
Event	Account	Debit $	Credit $
1	Insurance expense	150.00
	Prepaid Insurance		150.00
	(being Prepaid Insurance expired)
2	Supplies Expense	1,250.00
	Supplies		1,250.00
	(being supplies used)
3	Depreciation expense	5,268.00
	Accumulated Depreciation- Buildings		3,708.00
	Accumulated Depreciation- Equipment		1,560.00
	(being Depreciation charged to Buildings and Equipment)
4	Interest Expense	200.00
	Interest payable		200.00
	(being liability for Interest Expense created)
5	Unearned Rent Revenue	2,000.00
	Rent Revenue		2,000.00
	(being Unearned Rent Revenue earned )
6	Salaries and Wages expense	700.00
	Salaries and Wages payable		700.00
	(being liability for Salaries expense created)

Ledger
Cash
Date	Explanation	Ref.	Debit	Credit	Balance
May 31	Balance				3,600.00
Supplies
Date	Explanation	Ref.	Debit	Credit	Balance
May 31	Balance				2,050.00
May 31	Adjusting			1,250.00	800.00
Prepaid Insurance
Date	Explanation	Ref.	Debit	Credit	Balance
May 31	Balance				1,800.00
May 31	Adjusting			150.00	1,650.00
Land
Date	Explanation	Ref.	Debit	Credit	Balance
May 31	Balance				14,000.00
Buildings
Date	Explanation	Ref.	Debit	Credit	Balance
May 31	Balance				61,800.00
Accumulated Depreciation- Buildings
Date	Explanation	Ref.	Debit	Credit	Balance
May 31	Adjusting			3,708.00	3,708.00
Equipment
Date	Explanation	Ref.	Debit	Credit	Balance
May 31	Balance				15,600.00
Accumulated Depreciation- Equipment
Date	Explanation	Ref.	Debit	Credit	Balance
May 31	Adjusting			1,560.00	1,560.00
Accounts Payable
Date	Explanation	Ref.	Debit	Credit	Balance
May 31	Balance				4,900.00
Salaries and Wages payable
Date	Explanation	Ref.	Debit	Credit	Balance
May 31	Adjusting			700.00	700.00