The accounting manager at Antwerp’s TranquilStay Hotel has prepared the following income statement that pertains to the most recent accounting year.

The accounting manager is uncertain how to handle year-end adjusting entries and has sought your advice. Following a review of the business, you determine the following:
1. A €2,500 advance payment received in connection with a conference to be held in late July has been included in the sales revenue figure.
2. Employees have not been paid €4,000 in wages and salaries earned in the last four days of June.
3. Depreciation of €10,000 on a new car purchased this year has not been recorded.
4. The hotel rents a small adjoining property which it uses for patrons’ car parking whenever the hotel’s underground car park is full. The last rental fee paid was €900. is payment was made on 1st May and covered a three-month period. The account manager recorded this as prepaid rent and no entry has been made to adjust this account at the year-end.
5. The hotel holds an investment that earns €1,000 interest per month. June’s interest, which will be received in July, has not been recorded in the accounts.
6. Annual property insurance of €24,000 is paid semi-annually in advance.
The last €12,000 payment, which was made on 1st April 20X1 was debited to prepaid insurance. No adjusting entry to the prepaid insurance account has been made.

Required:

a) Prepare the necessary adjusting entries for the TranquilStay Hotel.

b) Following completion of the adjusting entries, prepare TranquilStay’s revised income statement for the year-ending 30th June 20X1.

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TranquilStay Hotel Income Statement for the year-ended 30 June 20X1 420,000 80,000 340,000 11,000 351,000 Sales revenue Less: Cost of sales Gross profit Add: Interest revenue Less: Expenses Salaries and wages expense 145,000 Depreciation expense 82,000 Car park rental expense 3,000 Insurance expense 18,000 Sundry expense 14,000 262,000 89,000