Question

Problem 3-2A The Skyline Motel opened for business on May 1, 2015. Its trial balance before adjustment on May 31 is as follows SKYLINE MOTEL Trial Balance May 31, 2015 101 126 130 Cash Supplies Prepaid Insurance 3,510 2,035 1,932 12,290 59,520 15,360 141 149 201 Buildings Equipment Accounts Payable Unearned Rent Revenue Mortgage Payable Common Stock Rent Revenue Advertising Expense Salaries and Wages Expense tilities Expense s11,724 3,180 40,000 35,103 9,497 275 301 429 610 726 732 3,307 $99,504 99,504 In addition to those accounts listed on the trial balance, the chart of accounts for Skyline Motel also contains the folowing 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, 2015 2. A count of supplies shows $741 of unused supplies on May 31 3. Annual depreciation is $2,976 on the buildings and $1,536 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 $726 are accrued and unpaid at May 31

Answer 1

a.Journal entry No Date Account title debit |credit 1 May 31. Insurance expense 161 Prepaid insuran ce 161 (1932"1/12) 2 May 31. Supplies expense 1294 Suppiles (2035-741) 1294 3 May 31. Depreciation expense 376 accumulated depreciation - building-2976/12 accumulated depreciation - equipment-1536/12 248 128 4May 31. Interest expense 400 Interest payable (40000*0.12*1/12) 400 5 May 31. Unearned rent revenue rent revneue (3180*2/3) 2120 2120 6 May 31. salaries and wages expense 726 726 salaries and wages payable

b.Ledger accounts cash Date May 31 No. 101 explanation debit credit Balance 3510 Equipment Date No. 149 explanation debit credit Balance 15360 Balance Balance supplies Date May 31 May 31 Accumulated depreciation-Equipment Date May No. 150 explanation debit credit Balance 128 No. 126 explanation debit credit Balance 2035 741 Adjusting 128 Balance Adjusting 1294 Accounts payable Date No. 201 Prepaid insurance Date May 31 May 31 No. 130 explanation debit credit Balance 1932 161 1771 explanation debit credit Balance Balance 11724 Balance Adjusting Unearned rent revenue Date May May 31 No. 208 explanation debit credit Balance 3180 1060 Lan Date May 31 No. 140 explanation debit credit Balance 12290 Balance Adjusting 2120 Balance Salaries and wages payable Date No. 212 Buildings Date May 31 explanation debit credit Balance Adjusting No. 141 explanation debit credit Balance 59520 726 726 Balance Interest payable Date No. 230 explanation debit credit Balance 400 Accumulated depreciation-Buildings Date May 31 No. 142 400 explanation debit credit Balance Adjusting Adjusting 248 248 Mortgage payable Date May No. 275 explanation debit credit Balance 40000 Balance

common stock Date May 31 No. 301 explanation debit credit Balance 35103 Balance No. 429 explanation debit credit Balance 9497 2120 11617 Rent revenue Date May 31 May 31 Balance Adjusting Advertising expense Date May 31 No. 610 explanation debit credit Balance 639 Balance Depreciation expense Date May 31 No. 619 explanation debit credit Balance 376 Adjusting 376 supplies expense Date May 31 No. 631 explanation debit credit Balance 1294 Adjusting 1294 Interest expense Date May 31 No. 718 explanation debit credit Balance 400 Adjusting 400 No. 722 explanation debit credit Balance 161 Insurance expense Date May 31 Adjusting 161 Salaries and wages Date May 31 May 31 No. 726 explanation debit credit Balance 3307 4033 expense Balance Adjusting 726 Utilities expense Date May 31 No. 726 explanation debit credit Balance 911 Balance

Part d: Part c: Adjusted Trial Balance May 31, 2015 Cash Supplies Prepaid Insurance Land Buildings Accumulated Depreciation Buildings Equipment Accumulated Depreciation Eguipment Accounts Payable Unearned Rent Revenue Salaries and Wages Payable Interest Payable Mortgage Payable Common stock Rent Revenue Advertising Expense Depreciation Expense Supplies Expense Interest Expense nsurance Expense Salaries and Wages Expense Utliies Expense Total Income Statement Debit Credit For the Month Ended May 31, 2015 Revenues Rent revenue Expenses Advertising Expense Depreciation Expense Supplies Expense nterest Expense nsurance Expense Salaries and Wages Expense Utlites Expense Total expenses Net income 3510 741 11617 639 376 1294 400 161 4033 911 12290 59520 248 15360 128 11724 1060 726 400 40000 35103 11617 7814 3803 Retained Earnings Statement For the Month Ended May 31, 2015 Retained Earnings, May 1 Add: Net in come Retained Earnings, May 31 639 376 1294 400 161 4033 911 0 3803 3803 101006 101006

Part e: Balance Sheet May 31, 2015 Assets Cash Supplies Prepaid insurance Land Buildings Less: Accumulated depreciation buildings Equipment Less: Accumulated depreciation equipment128 15232 Total assets 3510 741 12290 59520 248 59272 15360 92816 Liabilities and Stockholders' Equity Accounts payable Unearned rent revenue Salaries and wages pavable Interest pay able Mortgage payable Total liabilities Stockholders' equity Common stock Retained earnings Total liabilities and Stockholders' equity 11724 1060 726 400 40000 53910 35103 3803 38906 92816