1. Norman Bates, manages the Lakeside Travel Lodge for his mother. Mrs. Bates suspects Norman is up to no good, and has asked you to review the Lodges accounting records. Norman has provided you with the following income statement, and additional information for the quarter ending June 30, 2018.

Lakeside Travel Lodge
Income Statement
At June 30, 2018
Rent received						$ 212,000
Proceeds from gift shop sales						1,500
Mrs. Bates' Social Security payments received						9,000
Salaries and wages paid						(34,400)
Paid for supplies						(8,200)
Paid for inventory						(1,000)
Advertising paid						(2,000)
Insurance paid						(1,980)
Utilities paid						(600)
Boat dock repairs paid						(3,300)
Paid for new air conditioner						(6,000)
Net Income						$ 165,020

Additional information:
	Rent received includes $57,000 of deposits for fall 2018 rentals.
	The social security payments are for the months April through July. July's payment was received on June 30. Wages payable at 3/31/18 totaled $1,600. Wage expense of $400 per day for hourly employees is paid through Friday June 21.
	Supplies on hand were $1,800 at 3/31/18 and $2,200 at 6/30/18.
	The gift shop was added during the quarter. Sales are cash only. Ending inventory totaled $375.
	Radio advertising costs $1,000 a month during the summer season. Lakeside has paid through 6/1/18.
	The April 5 payment for insurance on the lodge covered the period from 4/1/18 to 3/31/19.
	A $350 utility bill covering June 2018 was received on 7/3/18.
	The final bill for boat dock repairs was received on July 5. The total cost of the repairs was $5,650. The contractor required a down payment of $1,000 in March to cover supplies.
	The new air conditioner was installed on May 1 just in time for the summer season. It has a useful life of 5 years.
	Real estate taxes on the lodge total $5,000 a quarter. The county bills real estate taxes one year in arrears.
	The income tax rate is 20%.

Required:

1. Prepare an income statement for Lakeside Travel Lodge for the quarter ending June 30, 2018 in proper form.

2. How would you characterize Normans grasp of accounting reality? Be specific.

3. When should revenue on gift shop sales be recognized?

4. When should cash from rental revenues be recorded?

E. Prepare the current asset and current liability sections of Lakeside Travel Lodges balance sheet at June 30, 2018 in good form. Assume a cash balance of $35,000 at 3/31/18.