Question

The Olathe Hotel opened for business on May 1, 2010. Here is its trial balance before adjustment on May 31.?

OLATHE HOTEL
Trial Balance
May 31, 2010

DebitCredit
Cash$2,500
Prepaid Insurance1,800
Supplies2,600
Land15,000
Lodge70,000
Furniture16,800
Accounts Payable $4,700
Unearned Rent Revenue 3,300
Mortgage Payable 36,000
Common Stock 60,000
Rent Revenue 9,000
Salaries Expense3,000
Utilities Expense800
Advertising Expense
500




$113,000

$113,000


Other data:
1.Insurance expires at the rate of $300 per month.
2.A count of supplies shows $1,050 of unused supplies on May 31.
3.Annual depreciation is $3,600 on the lodge and $3,000 on furniture.
4.The mortgage interest rate is 7%. (The mortgage was taken out on May 1.)
5.Unearned rent of $2,500 has been earned.
6.Salaries of $750 are accrued and unpaid at May 31.

step 1: journalize entries

step 2: Prepare a ledger using T accounts. Enter the trial balance amounts and post the adjusting entries.

step 3:Complete the Adjusted Trial Balance as of May 31.

step 4: Complete the income statement and a retained earnings statement for the month of May and a classified balance sheet at May 31.

step 5: Indicate which accounts should be closed on May 31.

3 years ago - 1 answers

Best Answer

Chosen by Asker

1. Insurance expires at the rate of $300 per month.
Dr Insurance Expense 300
Cr Prepaid Insurance 300
2. A count of supplies shows $1,050 of unused supplies on May 31.
Dr Supplies Expense 1,550
Cr Supplies 1,550
3. Annual depreciation is $3,600 on the lodge and $3,000 on furniture.
Dr Depreciation Expense, Lodge 300
Cr Accumulated Depreciation, Lodge 300

Dr Depreciation Expense, Furniture 250
Cr Accumulated Depreciation, Furniture 250
4. The mortgage interest rate is 7%. (The mortgage was taken out on May 1.)
Dr Interest Expense 210
Cr Interest Payable 210
5. Unearned rent of $2,500 has been earned.
Dr Unearned Rent Revenue 2,500
Cr Rent Revenue 2,500
6. Salaries of $750 are accrued and unpaid at May 31.
Dr Salaries Expense 750
Cr Salaries Payable 750

step 2: Prepare a ledger using T accounts. Enter the trial balance amounts and post the adjusting entries.
step 3:Complete the Adjusted Trial Balance as of May 31.
I'll let you try these two yourself.

step 4: Complete the income statement and a retained earnings statement for the month of May and a classified balance sheet at May 31.

Income Statement

Rent Revenue. . . . . . . . . . . . . . . . . . .. . . $11,500
Expenses:
Salaries Expense. . . . . . . . ... .$3,750
Utilities Expense. . . . . . . . . . . .. . 800
Advertising Expense. . . . . . . . . . . 500
Insurance Expense. . . . . . . . . . . . 300
Supplies Expense . . . . . . . . . . . 1,550
Depreciation Expense, Lodge . . . . .300
Depreciation Expense, Furniture. . . 250
Interest Expense . . . . . . . . . . . . . .210
Total Expenses.. . . . . . . . . . . . . . . . . . . . ..7,660
Net Income. . . . . . . . . . . . . . . . . . . . . . . .$3,840

Balance Sheet

Current Assets
Cash. . . . . . . . . . . . . . . . . . . . ....$2,500
Prepaid Insurance. . . . . . . . . . . .....1,500
Supplies. . . . . . . . . . . . . . . . . . .....1,050
Total Current Assets . . . . . . . . . . . . . . . . . . .5,050
Property, Plant, and Equipment
Land. . . . . . . . . . . . . . . . . . . . ...... . . . . . ..15,000
Lodge. . . . . . . . . . . . . . . . . . . .....70,000
Less: Accumulated Depreciation. . . . .300.. . 69,700
Furniture. . . . . . . . . . . . . . . . . . . .16,800
Less: Accumulated Depreciation. . . . .250.. . 16,550
Total Assets. . . . . . . . . . . . . . . . . . . . . . . 106,300
Liabilities:
Accounts Payable. . . . . . . . . . .. . . 4,700
Interest Payable. . . . . . . . . . . . . . . . .210
Salaries Payable. . . . . . . . . . . . . . . . 750
Unearned Rent Revenue. . . . . . . . . . .800
Mortgage Payable. . . . . . . . . . . . .36,000
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . 42,460
Stockholders' Equity:
Common Stock. . . . . . . . . . . . . . .60,000
Retained Earnings. . . . . . . . . . . . . .3,840. . 63,840
Total Liabilities and
Stockholders' Equity. . . . . . . . . . . . . . . . $106,300

step 5: Indicate which accounts should be closed on May 31.

All Revenue and Expense accounts should be closed

3 years ago