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 $ 2,500

Supplies 2,600

Prepaid Insurance 1,800

Land 15,000

Buildings 70,000

Equipment 16,800

Accounts Payable $ 4,700

Unearned Rent Revenue 3,300

Mortgage Payable 36,000

Common Stock 60,000

Rent Revenue 9,000

Salaries and Wages Expense 3,000

Utilities Expense 800

Advertising Expense 500

$113,000 $113,000

Other data:

1. Insurance expires at the rate of $450 per month.

2. A count of supplies shows $1,050 of unused supplies on May 31.

3. Annual depreciation is $3,600 on the building and $3,000 on equipment.

4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.)

5. Unearned rent of $2,500 has been earned.

6. Salaries of $900 are accrued and unpaid at May 31.

Instructions

(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.