Chapter 3: Trial Adjustment 3-2A

Account Number		Debit	Credit
101	Cash	$3,500
126	Supplies	$2,080
130	Prepaid Insurance	$2,400
140	Land	$12,000
141	Buildings	$60,000
149	Equipment	$15,000
201	Accounts Payable		$11,180
208	Unearned Rent Revenue		$3,300
275	Mortgage Payable		$40,000
301	Common Stock		$35,000
429	Rent Revenue		$10,300
610	Advertising Expense	$600
726	Salaries and Wages Expense	$3,300
732	Utilities Expense	$900
		$99,780	$99,780

Problem 3-2A

The Skyline Motel opened for business on May 1, 2015. Its trial balance before adjustment on May 31 is above.

In addition to those accounts listed on the trial balance, the chart of accounts for Skyline Motel also contains the following accounts and account numbers: No. 142 Accumulated DepreciationBuildings, No. 150 Accumulated DepreciationEquipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 619 Depreciation Expense, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

Other data:

1.	Prepaid insurance is a 1-year policy starting May 1, 2015.
2.	A count of supplies shows $750 of unused supplies on May 31.
3	Annual depreciation is $3,000 on the buildings and $1,500 on equipment.
4.	The mortgage interest rate is 12%. (The mortgage was taken out on May 1.)
5.	Two-thirds of the unearned revenue has been earned.
6.	Salaries of $750 are accrued and unpaid at May 31.

Journalize the adjusting entries on May 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.	Date	Account Titles and Explanation	Debit	Credit
1.	May 31
2.	May 31
3.	May 31
4.	May 31
5.	May 31
6.	May 31

Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Post entries in the order of journal entries posted in the previous part of the question.)

Cash							No. 101
	Date	Explanation	Ref	Debit	Credit	Balance
	May 31	Balance
Supplies	May 31	Balance					No. 126
	May 31	Adjusting	J1
Prepaid Insurance	May 31	Balance					No. 130
	May 31	Adjusting	J1
Land	May 31	Balance					No. 140
Buildings	May 31	Balance					No. 141
Accumulated Depreciation - Buildings	May 31	Adjusting	J1				No. 142
Equipment	May 31	Balance					No. 149
Accumulated Depreciation - Equipment	May 31	Adjusting	J1				No. 150
Accounts Payable	May 31	Balance					No. 201
Unearned Rent Revenue	May 31	Balance					No. 208
	May 31	Adjusting	J1
Salaries and Wages Payable	May 31	Adjusting	J1				No. 212
Interest Payable	May 31	Adjusting	J1				No. 230
Mortgage Payable	May 31	Balance					No. 275
Common Stock	May 31	Balance					No. 301
Rent Revenue	May 31	Balance					No. 429
		Adjusting	J1
Advertising Expense	May 31	Balance					No. 610
Depreciation Expense	May 31	Adjusting	J1				No. 619
Supplies Expense	May 31	Adjusting	J1				No. 631
Interest Expense	May 31	Adjusting	J1				No. 718
Insurance Expense	May 31	Adjusting	J1				No. 722
Salaries and Wages Expense	May 31	Balance					No. 726
		Adjusting	J1
Utilities Expense	May 31	Balance					No. 732

Prepare an adjusted trial balance on May 31.

SKYLINE MOTEL

Adjusted Trial Balance

May 31, 2015

	$ Debit	$ Credit

Prepare an income statement for the month of May 31.

Skyline Motel

Income Statement

For the Month Ended May 31, 2015

Account Name:
		$
Account Name:
	$
Account Name:
		$

Prepare a retained earnings statement for the month of May 31.

Skyline Motel

Retained Earnings Statement

For the Month Ended May 31, 2015

Account Name:				$
Add/Less		Account Name:
Account Name:				$

Prepare a balance sheet at May 31. (List assets in order of liquidity. List Property, plant and equipment in order of land, buildings and equipment.)