Problem regarding the solo hotel

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Reference no: EM13836793

Problem 1: The Solo Hotel opened for business on May 1, 2014. Here is its trail 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 $3,600on the buildings 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 adjusting 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.

e. Identify which accounts should be closed on May 31.

Reference no: EM13836793

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