Question

Paste B I U $ % ) 4.0 .00 .00 →.0 1 Editing E Cell Styles Ti Format 16 fx A B с D E F G H ] L M N o р 1 The Carlisle Condominiums opened for business on October 1, 2020. Here is its trial balance before adjustment on October 31. 2 3 4 11 12 13 17 Carlisle Condominiums 5 Trial Balance 6 6 October 31, 2020 7 Dr. Cr. 8 8 Cash 8 12,500 9 Supplies 13,000 10 Prepaid Insurance 9,000 Land 75,000 Buildings 350,000 Equipment 84,000 14 Accounts payable 23,500 15 Unearned rent revenue 16,500 16 Mortgage payable 180,000 Common stock 300,000 18 Rent revenue 45,000 19 Salaries and wages expense 15,000 20 Utilities expense 4,000 21 Advertising expense 2,500 22 565.000 565.000 23 24 Additional information: 25 1. The two-year insurance policy was aquired 10/1/20. 26 2. A count of supplies shows $5,250 of unused supplies on October 31 27 3. Annual depreciation is $18,000 on the building and $15,000 on equipment. 28 4. The mortgage interest rate is 6%. (The mortgage was taken out on October 1.) 29 5. $12,500 of rent that was unearned on October 1 has been earned by October 31 30 6. Salaries of $4,500 earned in October remain unpaid at October 31 31 32 Required: 33 a. Journalize the adjusting entries on October 31. 34 b. Prepare a ledger using T-accounts. Enter the trial balance amounts and post the adjusting entries. 35 c. Prepare an adjusted trial balance on October 31, 2020. 36 d. Prepare (1) an income statement and (2) a retained earnings statement for the month of October and (3) a classified balance sheet at October 31. 37 e. Prepare closing entries at October 31, 2020. 38 39 40

Answer 1

39 Debit Credit 40 375 Date Account Title & Explanation 31-Oct Insurance expense (9000/2*1/12) Prepaid insurance (To record expired insurance) 41 375 42 43 44 7750 31-Oct Supplies expense (13000 - 5250) Supplies (To record supplies consumed during the Year) 45 46 47 7750 48 1500 49 31-Oct Depreciation Expense - Building (18000/12) Accumulated Depreciation - Building (To record depreciation expense) 1500 50 51 52 1250 53 31-Oct Depreciation Expense - Equipment(15000/12) Accumulated Depreciation - Equipment (To record depreciation expense) 1250 54 55 56 900 31-Oct Interest Expense (180000*6%*1/12) Interest Payable (To record accrued interest expense) 57 58 900

60 12,500 61 31-Oct Unearned Rent Revenue Rent Revenue (To record rent revenue earned during the Year) 12,500 62 4,500 98 8 8 8 31-Oct Salaries & Wages Expense Salaries & Wages Payable ((To record accrued salaries & wages) 4,500

68 69 70 71 72 73 74 75 76 77 78 Carlisle Condominiums Adjusted Trial Balance For the month ending October 31 Account Title Debit Credit Cash 12,500 Supplies 5,250 Prepaid insurance (9000-3755) 8,625 land 75,000 Building 350,000 Accumulated Depreciation - Building 1,500 Equipment 84,000 Accumulated Depreciation - Equipment 1,250 Accounts payable 23,500 Unearned Rent Revenue (16500-12500) 4,000 Salaries & Wages Payable 4,500 Interest Payable 900 Mortgage Payable 180,000 Common Stock 300,000 Rent Revenue (45000+ 12500) 57,500 Salaries & Wages Expense (15000+4500) 19,500 Utilities expense 4,000 Advertising Expense 2,500 79 80 81 82 83 84 85 86 87 88 89

90 375 91 92 Insurance expense Supplies expense Depreciation Expense - Building Depreciation Expense - Equipment interest Expense Total 93 7,750 1,500 1,250 900 573,150 94 95 573,150 96 97 98 99 100 101 102 103 Carlisle Condominiums Income Statement For the month ending October 31 Rent Revenue (45000+ 12500) 57,500 Less Expenses Salaries & Wages Expense (15000+4500) 19,500 Utilities expense 4,000 Advertising Expense 2,500 Insurance expense Supplies expense 7,750 Depreciation Expense - Building 1,500 Depreciation Expense - Equipment 1,250 interest Expense 900 37,775 Net Income 19,725 104 105 375 106 107 108 109 110

112 113 114 115 Carlisle Condominiums Retained Earnings Statement For the month ending October 31 Beginning Balance of Retained Earnings Add Net Income 19,725 Less Dividend Ending Balance of Retained Earnings 0 116 117 0 19,725 19,725 118 119 120 121 122 Carlisle Condominiums Balance Sheet As on October 31 123 124 125 126 Assets Cash Supplies Prepaid insurance Total Current Assets 12,500 5,250 8,625 127 128 26,375

129 130 131 75,000 350,000 (1,500) 84,000 (1,250) 506,250 532,625 132 133 134 135 136 137 land Building Accumulated Depreciation - Building Equipment Accumulated Depreciation - Equipment Total Assets Liabilities and Shareholder's Equity Accounts payable Unearned Rent Revenue Salaries & Wages Payable Interest Payable Total Current Liabilities Mortgage Payable Total Liabilities Common Stock Retained Earnings Total Liabilities and Shareholder's Equity 138 139 140 23,500 4,000 4,500 900 32,900 180,000 212,900 300,000 19,725 319,725 532,625 141 142 143 144 145 146

147 148 149 150 151 152 153 154 155 156 Carlisle Condominiums Post Closing Trial Balance For the month ending October 31 Account Title Debit Credit Cash 12,500 Supplies 5,250 Prepaid insurance (9000-3755) 8,625 land 75,000 Building 350,000 Accumulated Depreciation - Building 1,500 Equipment 84,000 Accumulated Depreciation - Equipment 1,250 Accounts payable 23,500 Unearned Rent Revenue (16500-12500) 4,000 Salaries & Wages Payable 4,500 Interest Payable Mortgage Payable 180,000 Common Stock 300,000 Retained Earnings 19,725 Total 535,375 535,375 157 158 159 160 161 162 900 163 164 165 166