Question

pare adjusting entries est, and prepare adjusted I balance and financial rements. 2, 3, 4) X S P3-2A The Skyline Motel opened for business on May 1, 2019. Its trial balance before adjustment on May 31 is as follows. SKYLINE MOTEL Trial Balance May 31, 2019 Debit Credit Account Number 101 Cash $ 3,500 126 Supplies 2,080 130 Prepaid Insurance 2,400 Land 12,000 141 Buildings 60,000 149 Equipment 15,000 201 Accounts Payable 208 Unearned Rent Revenue $11,180 275 Mortgage Payable 3,300 311 Common Stock 40,000 429 Rent Revenue 35,000 610 Advertising Expense 10,300 726 Salaries and Wages Expense 732 140 600 3,300 Utilities Expense 900 $99,780 $99,780 In addition to those accounts listed on the trial balance, the chart of accounts for Sky- line Motel also contains the following accounts and account numbers: No. 142 Accu- mulated 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, 2019. 2. A count of supplies shows $750 of unused supplies on May 31. 3. Annual depreciation is $3,000 on the buildings and $1,500 on equipment. 4. The mortgage interest rate is 12%. (The mortgage was taken out on May 1.) 5. Two-thirds of the unearned rent revenue has been earned. 6. Salaries of $750 are accrued and unpaid at May 31.

Answer 1

1. Adjusting Entries -

Date Credit SKYLINE MOTAL Adjusting Entries Accounts Title Debit Insurance Expense $ 200 Prepaid Insurance (Being Insurance expene expired) 1 $ 200 2 Supplies Expenses $ 1,330 Supplies (Being Supplies Expense Incurred) $ 1,330 3.1 Depreciation Expense $ 250 Accumulated Depreciation - Building (Being depreciation expense incurred) $ 250 3.2 Depreciation Expense $ 125 Accumulated Depreciation - Equipment (Being depreciation expense incurred) $ 125 4 400 Interest Expense $ Interest Payable (Being Interest Expense incurred) $ 400 5 $ 220 Unearned Rent Revenue Rent Revenue (Being Revenue earned) $ 220 6 750 Salaries Expense $ Salaries Payable (Being salaries Expense incurred) $ 750

2. Adjusted Trial Balance -

Credit $ 250 SKYLINE MOTAL Adjusted Trial Balance May 31 Accounts Title Debit Cash $ 3,500 Supplies $ 750 Prepaid Insurance $ 2,200 Land $ 12,000 Buildings $ 60,000 Accumulated Depreciation - Building Equipment $ 15,000 Accumulated Depreciation - Equipment Accounts Payable Interest Payable Salaries Payable Unearned Rent Revenue Mortgage Payable Common Stock Rent Revenue Advertising Expense $ 600 Salaries and Wages Expense $ 3,300 Utilities Expense $ 900 Insurance Expense $ 200 Supplies Expenses $ 1,330 Depreciation Expense $ 375 Interest Expense $ 400 Salaries Expense $ 750 $ 125 $ 11,180 $ 400 $ 750 $ 3,080 $ 40,000 $ 35,000 $ 10,520 Total $ 101,305 $ 101,305

3. Income Statement -

SKYLINE MOTAL Income Statement May 31 Rent Revenue $ 10,520 Expenses: Advertising Expense Salaries and Wages Expense Utilities Expense Insurance Expense Supplies Expenses Depreciation Expense Interest Expense Salaries Expense Total Expenses $ 600 $ 3,300 $ 900 $ 200 $ 1,330 $ 375 $ 400 $ 750 $ 7,855 Net Income $ 2,665

4. Statement of Retained Earnings -

SKYLINE MOTAL Statement of Retained Earnings May 31 Retained Earnings, Openings Add: Net Income $ 2,665 Less: Dividends $ $ $ 2,665 Retained Earnings Closing $ 2,665

5. Balance Sheet -

SKYLINE MOTAL Balance Sheet May 31 Assets Current Assets: Cash Supplies Prepaid Insurance Total Current Assets $ 3,500 $ 750 $ 2,200 $ 6,450 Land $ 12,000 Buildings 60,000 Accumulated Depreciation - Building $ (250) $ 59,750 Equipment $ 15,000 Accumulated Depreciation - Equipment $ (125) $ 14,875 Total Assets $ 93,075 Liabilities and Stockholder's Equity Current Liabilities: Accounts Payable Interest Payable Salaries Payable Unearned Rent Revenue Total Current Liabilities $ 11,180 $ 400 $ 750 $ 3,080 $ 15,410 Mortgage Payable $ 40,000 Total Liabilities $ 55,410 Stockholder's Equity: Common Stock Retained Earnings Total Stockholder's Equity $ 35,000 $ 2,665 $ 37,665 Total Liabilities and Stockholder's Equity $ 93,075