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