Problem 1: Adjusting Journal Entries, Adjusted Trial Balance, Financial Statements

Mr. Sky started his own pharmaceutical firm to discover new drugs to make peoples lives better, SkyPVP Inc., on May 1, 2022. The trial balance on May 31 is as follows.

SKYPVP INC. Trial Balance May 31, 2022

Acc. No. Debit Credit

101 Cash 4,500

112 Accounts Receivable 6,000

126 Supplies 1,900

130 Prepaid Insurance 3,600

149 Equipment 11,400

201 Accounts Payable 4,500

209 Unearned Service Revenue 2,000

301 Owners Capital 18,700

400 Service Revenue 9,500

726 Salary & Wages Expenses 6,400

729 Rent Expense 900

Total 34,700 (Dr.) 34,700 (Cr.)

In addition to those accounts listed on the trial balance, the chart of accounts for Meteor Inc. also contains the following accounts and account numbers:

No. 150 Accumulated DepreciationEquipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense, No. 717 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense. Other data: 1. $900 of supplies have been used during the month. 2. Utilities expense incurred but not paid on May 31, 2018, $250. 3. The insurance policy is for 2 years. 4. $400 of the balance in the unearned service revenue account remains unearned at the end of the month. 5. May 31 is a Wednesday, and employees are paid on Fridays. SkyPVP Inc. has two employees, who are paid $920 each for a 5-day workweek. 6. The office furniture has a 5-year life with no salvage value. It is being depreciated at $190 per month for 60 months. 7. Invoices representing $1,700 of services performed during the month have not been recorded as of May 31.

Instructions

(a) Prepare the adjusting entries for the month of May

(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a checkmark in the posting reference column.

(c) Prepare an adjusted trial balance on May 31, 2022.

d) Prepare Income Statement, Statement of Owners Equity, and Balance Sheet on May 31, 2022.