The Solo Hotel opened for business on May 1, 2014. Her

29 Jun The Solo Hotel opened for business on May 1, 2014. Her

Question
The Solo Hotel opened for business on May 1, 2014. Here is its trial balance before adjustment on May 31.

SOLO HOTEL

Trial Balance

May 31, 2014

Debit

Credit

Cash

$ 2,500

Supplies

2,600

Prepaid Insurance

1,800

Land

15,000

Buildings

70,000

Equipment

16,800

Accounts Payable

$ 4,700

Unearned Rent Revenue

3,300

Mortgage Payable

36,000

Common Stock

60,000

Rent Revenue

9,000

Salaries and Wages Expense

3,000

Utilities Expense

800

Advertising Expense

500

$113,000 =======

$113,000 =======

Other data:

1. Insurance expires at the rate of $450 per month.

2. A count of supplies shows $1,050 of unused supplies on May 31.

3. Annual depreciation is $3,600 on the building and $3,000 on equipment.

4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.)

5. Unearned rent of $2,500 has been earned.

6. Salaries of $900 are accrued and unpaid at May 31.

Instructions

• (a) Journalize the adjusting entries on May 31.

• (b) Prepare a ledger using T-accounts. Enter the trial balance amounts and post the adjusting entries.

• (c)Prepare an adjusted trial balance on May 31.

• ?

(d) Prepare an income statement and a retained earnings statement for the month of May and a classified balance sheet at May 31.

Hint: Rent revenue is $11,500, Adjusted trial balance totals are $114,630 and Net income for May is $3,570