The Julien Hotel opened for business on May 1, 2007. Here is its trial balance before adjustment on May 31.

JULIEN HOTEL Trial Balance May 31, 2007 Debit Credit Cash $2500 Prepaid Insurance 1,800 Supplies 2,600 Land 15,000 Lodge 70,000 Furniture 16,800 Accounts Payable $ 4,700 Unearned Rent Revenue 3,300 Mortgage Payable 36,000 Common Stock 60,000 Rent Revenue 9,000 Salaries Expense 3,000 Utilities Expense 800 Advertising Expense 500

$113,000 $113,000 Other data: 1. Insurance expires at the rate of $300 per month. 2. An inventory of supplies shows $1,350 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 9%. (The mortgage was taken out on May 1.) 5. Unearned rent of $1,500 has been earned. 6. Salaries of $750 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.

Problems: Set A 201

(d) Prepare an income statement and a retained earnings statement for the month of

(d) Net income $ 3,080 May and a classified balance sheet at May 31.

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