Kabul Star Hotel adjusts its accounts on a monthly basis. Most guests pay at the time they check out, and the amount collected is credited to Rental Revenue. A few guests pay in advance for rooms and these amounts are credited to Unearned Rental Revenue at the time of receipt.

a: Salaries earned by employees but not paid amount to $20,000.

b: As of Dec 31, Kabul Star Hotel has earned $11,000 rental revenue but has not received any amount yet.

c: On Dec 1, a room was rented to a corporation for six months at a monthly rental of $5,000. The entire six month rental of $30,000 was collected in advance and credited to Unearned Rental Revenue.

d: A Corolla Car to carry guests to and from the airport had been rented on Dec 15, at a daily rate of $250. No rental payment has yet been made.

e: Depreciation on the Hotels building is based on an estimated useful life of 15 years. The original cost of the building was $500,000 and a residual value of $50,000.

f: A one-year fire insurance policy had been purchased on Dec. 1, The premium of $24,000 for the entire life of the policy had been paid on Dec. 1 and recorded as Unexpired Insurance.

Instructions:

1. Prepare adjusting entries of the above transactions.

2. Prepare adjusted Trial Balance.

3. Prepare Financial Statements (Balance Sheet & Income Statement).

4. Prepare closing entries and prepare after closing trial balance.