Problem 3-2A

The Skyline Motel opened for business on May 1, 2017. Its trial balance before adjustment on May 31 is as follows.

SKYLINE MOTEL Trial Balance May 31, 2017 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 40,000 311 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

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, 2017. 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 rent revenue has been earned. 6. Salaries of $750 are accrued and unpaid at May 31.

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Journalize the adjusting entries on May 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)

No. Date Account Titles and Explanation Debit Credit 1. May 31 Insurance Expense 200 Prepaid Insurance 200 2. May 31 Supplies Expense 1330 Supplies 1330 3. May 31 Depreciation Expense 375 Accumulated Depreciation-Buildings 250 Accumulated Depreciation-Equipment 125 4. May 31 Interest Expense 400 Interest Payable 400 5. May 31 Unearned Rent Revenue 2200 Rent Revenue 2200 6. May 31 Salaries and Wages Expense 750 Salaries and Wages Payable 750

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Prepare a ledger using the three-column form of account. Enter the trial balance amounts into the balance column and then post the adjusting entries. (Post entries in the order of journal entries posted in the previous part of the question. Round answers to 0 decimal places, e.g. 5,275.)

Cash No. 101 Date Explanation Ref Debit Credit Balance May 31 Balance 3500 Supplies No. 126 Date Explanation Ref Debit Credit Balance May 31 Balance 2080 May 31 Adjusting J1 1330 750 Prepaid Insurance No. 130 Date Explanation Ref Debit Credit Balance May 31 Balance 2400 May 31 Adjusting J1 200 2200 Land No. 140 Date Explanation Ref Debit Credit Balance May 31 Balance 12000 Buildings No. 141 Date Explanation Ref Debit Credit Balance May 31 Balance 60000 Accumulated DepreciationBuildings No. 142 Date Explanation Ref Debit Credit Balance May 31 Adjusting J1 250 Equipment No. 149 Date Explanation Ref Debit Credit Balance May 31 Balance 15000 Accumulated DepreciationEquipment No. 150 Date Explanation Ref Debit Credit Balance May 31 Adjusting J1 125 Accounts Payable No. 201 Date Explanation Ref Debit Credit Balance May 31 Balance 11180 Unearned Rent Revenue No. 208 Date Explanation Ref Debit Credit Balance May 31 Balance 3300 May 31 Adjusting J1 2200 1100 Salaries and Wages Payable No. 212 Date Explanation Ref Debit Credit Balance May 31 Adjusting J1 750 750 Interest Payable No. 230 Date Explanation Ref Debit Credit Balance May 31 Adjusting J1 400 400 Mortgage Payable No. 275 Date Explanation Ref Debit Credit Balance May 31 Balance 40000 Common Stock No. 311 Date Explanation Ref Debit Credit Balance May 31 Balance 35000 Rent Revenue No. 429 Date Explanation Ref Debit Credit Balance May 31 Balance 10300 May 31 Adjusting J1 Advertising Expense No. 610 Date Explanation Ref Debit Credit Balance May 31 Balance Depreciation Expense No. 619 Date Explanation Ref Debit Credit Balance May 31 Adjusting J1 Supplies Expense No. 631 Date Explanation Ref Debit Credit Balance May 31 Adjusting J1 Interest Expense No. 718 Date Explanation Ref Debit Credit Balance May 31 Adjusting J1 Insurance Expense No. 722 Date Explanation Ref Debit Credit Balance May 31 Adjusting J1 Salaries and Wages Expense No. 726 Date Explanation Ref Debit Credit Balance May 31 Balance May 31 Adjusting J1 Utilities Expense No. 732 Date Explanation Ref Debit Credit Balance May 31 Balance

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Prepare an adjusted trial balance on May 31. (Round answers to 0 decimal places, e.g. 5,275.)

SKYLINE MOTEL Adjusted Trial Balance For the Quarter Ended May 31, 2017 May 31, 2017 For the Month Ended May 31, 2017 Debit Credit $ $ Totals $ $

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Prepare an income statement for the month of May 31. (Round answers to 0 decimal places, e.g. 5,275.)

SKYLINE MOTEL Income Statement For the Quarter Ended May 31, 2017 May 31, 2017 For the Month Ended May 31, 2017 Dividends Expenses Investment Net Income / (Loss) Retained Earnings, May 1 Retained Earnings, May 31 Revenues Total Expenses Total Revenues $ Dividends Expenses Investment Net Income / (Loss) Retained Earnings, May 1 Retained Earnings, May 31 Revenues Total Expenses Total Revenues $ Dividends Expenses Investment Net Income / (Loss) Retained Earnings, May 1 Retained Earnings, May 31 Revenues Total Expenses Total Revenues Dividends Expenses Investment Net Income / (Loss) Retained Earnings, May 1 Retained Earnings, May 31 Revenues Total Expenses Total Revenues $

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Prepare an retained earnings statement for the month of May 31. (Round answers to 0 decimal places, e.g. 5,275.)

SKYLINE MOTEL Retained Earnings Statement For the Month Ended May 31, 2017 For the Quarter Ended May 31, 2017 May 31, 2017 Dividends Expenses Investment Net Income / (Loss) Retained Earnings, May 1 Retained Earnings, May 31 Revenues Total Expenses Total Revenues $ Add Less : Dividends Expenses Investment Net Income / (Loss) Retained Earnings, May 1 Retained Earnings, May 31 Revenues Total Expenses Total Revenues Dividends Expenses Investment Net Income / (Loss) Retained Earnings, May 1 Retained Earnings, May 31 Revenues Total Expenses Total Revenues $

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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. Round answers to 0 decimal places, e.g. 5,275.)

SKYLINE MOTEL Balance Sheet May 31, 2017 For the Month Ended May 31, 2017 For the Quarter Ended May 31, 2017 Assets $ $ Add Less : Add Less : Current Assets Liabilities Intangible Assets Long-term Investments Long-term Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity $ Liabilities and Stockholders' Equity Current Assets Liabilities Intangible Assets Long-term Investments Long-term Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity $ Current Assets Liabilities Intangible Assets Long-term Investments Long-term Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity Current Assets Liabilities Intangible Assets Long-term Investments Long-term Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity $ Current Assets Liabilities Intangible Assets Long-term Investments Long-term Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity Current Assets Liabilities Intangible Assets Long-term Investments Long-term Liabilities Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity $