The Solo Hotel opened for business on May 1, 2014. Here is its trial balance before adjustment on May 31.

SOLO HOTEL

Trial Balance

May 31, 2014

Debit

Credit

Cash

$ 2,676

Supplies

2,600

Prepaid Insurance

1,800

Land

15,176

Buildings

76,000

Equipment

16,800

Accounts Payable

$ 4,876

Unearned Rent Revenue

3,300

Mortgage Payable

42,000

Common Stock

60,176

Rent Revenue

9,000

Salaries and Wages Expense

3,000

Utilities Expense

800

Advertising Expense

500

$119,352

$119,352

Other data:

1.

Insurance expires at the rate of $360 per month.

2.

A count of supplies shows $1,188 of unused supplies on May 31.

3.

(a) Annual depreciation is $3,360 on the building.

(b) Annual depreciation is $3,240 on equipment.

4.

The mortgage interest rate is 5%. (The mortgage was taken out on May 1.)

5.

Unearned rent of $2,586 has been earned.

6.

Salaries of $751 are accrued and unpaid at May 31.

(a) Journalize the adjusting entries on May 31.

(b) Prepare a ledger using T-accounts. Enter the trial balance amounts and post the

adjusting entries.

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

(d) Prepare an income statement and a retained earnings statement for the month of May

and a classified balance sheet at May 31.

(e) Identify which accounts should be closed on May 31.