Question

P3.ZA Prepare adjusting entries, post, and prepare adjusted trial balance and financial statements. (LO 2, 3, 4) Hank's Hotel opened for business on May 1, 2020. Its trial balance before adjustment on May 31 is as follows. Hank's Hotel Trial Balance 31-May-20 Adjustment (a) Adjusted Trial Balance (b) Credit Debit Credit Debit Credit Debit $3,400 2,080 2,400 12,000 60,000 15,000 4,700 3,300 Acct Num Acct Name 101 Cash 126 Supplies 130 Prepaid Insurance 140 Land 141 Buildings 142 Accum. Depreciation-Building 149 Equipment 150 Accum. Depreciation-Equipment 201 Accounts Payable 208 Unearned Rent Revenue 212 Salaries and Wages Payable 230 Interest Payable 275 Mortgage Payable 301 Owner's Capital 429 Rent Revenue 610 Advertising Expense 619 Depreciation Expense 631 Supplies Expense 718 Interest Expense 722 insurance Expense 726 Salaries and Wages Expense 732 Utilities Expense 40,000 41,380 10,300 600 3,300 900 $99,680 $99,680 0 0 $0 $0 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.
I want the solution to all parts ASAP, please.

one more thing, I tried doing parts of "financial statement" but got some of them wrong. The last picture I attached I highlighted my mistake with red colour. please explain why are they wrong. Thank You.

Answer 1

From the information given above, I have prepared Adjusting Entries, Adjusted Trial Balance, Income Statement, Statement of Owner's Capital and Balance Sheet of Hank's Hotel.

From the answers you have posted, I have observed that you have taken the annual depreaciation of building of 3600/- and depreciation on equipment 1500/- as they have mentioned in question in the Income Statement & Balance Sheet, you need to calculate the depreciation only for the month of may. I have made the calculations in the workings.

Hank's Hotel Adjusting Entries for the month 31st may 2020. DR Date 31, May Particulars DR CR Insurance expense 200 |To Prepaid Insurance 200 (Prepaid Insurance paid 2400/- is 1 year policy for may 2020, 2400*(1/12) = 200) Date Particulars CR 31, May Interest expense 200 To Interest Payable 200 (Mortage amount is 40000/- Interest rate is 6% per annum Interest expense for may 2020 is 40000*6%*(1/12)=200) 31, May Unearned Rent Revenue 2200 To Rent Revenue 2200 (Unearned Rent Revenue amounts to 3300/- Two third of amount is earned = 3300*(2/3)= 2200) 31, May 1330 1330 Supplies expense To Supplies Opening Balance Less: Closing balance Supplies used in May 2080 750 1330 31, May Salaries and Wages expense 750 To Salaries and wages Payable (Salaries payable for the month of May 2020) 750 31, May 425 125 Depreciation expense Accumulated Depreciation-Building 300 Accumulated Depreciation- Equipment (Annual Depreciation expense on building = 3600 Depreciation expense on building for may 2020= 3600/12=300 (Annual Depreciation expense on Equipment = 1500 Depreciation expense on equipment for may 2020= 1500/12= 125)

Hank's Hotel Trial Balance as on 31st May 2020 Opening Balance DR CR Adjustments DR CR Adjusted Trial Balance DR CR 3400 2080 3400 750 1330 200 2400 12000 60000 2200 12000 60000 300 300 15000 15000 125 125 4700 4700 3300 2200 1100 750 750 Account Cash Supplies Prepaid Insurance Land Building Accumulated Depreciation-Building Equipment Accumulated Depreciation Equipment Accounts Payable Unearned Rent Revenue Salaries and Wages Payable Interest Payable Mortgage Payable Owner's Capital Rent Revenue Advertising expense Depreciation expense Supplies expense Interest expense Insurance expense Salaries and Wages expense Utilities expense Total 200 200 40000 40000 41380 10300 41380 2200 12500 600 600 425 425 1330 1330 200 200 200 200 750 3300 900 4050 900 99680 99680 5105 5105 101055 101055

Hank's Hotel Income Statement For the Period Ending 31st May 2020. Hank's Hotel Balance Sheet as on 31st May 2020 Revenues Amount Amount 12500 Rent Revenue Assets Particulars Amount Amount Land 12000 12000 Building 60000 Less: Accumulated Depreciation-Building -300 59700 Equipment 15000 Accumulated Depreciation Equipment -125 14875 600 425 1330 Expenses Advertising expense Depreciation expense Supplies expense Interest expense Insurance expense Salaries and Wages expense Utilities expense Net Income 200 3400 750 200 4050 Cash Supplies Prepaid Insurance Total Assets 2200 900 7705 92925 4795 47001 Hank's Hotel Statement of Owner's Equity For the Period Ending 31st May 2020. 1100 Liabilities Accounts Payable Unearned Rent Revenue Salaries and Wages Payable Interest Payable Mortgage Payable 750 200 Beginning Balance 41380 40000 4795 Add: Net Income/(Loss) Less: Owner's Drawings Owner's Capital Total Liabilities 46175 92925 Ending Balance 46175