The River Run Hotel Corp. opened for business on May 1, 1996. Its trial balance before adjustment on May 31 is as follows:

Other data:
1. Insurance expires at the rate of \(\$ 200\) per month.
2. An inventory of supplies shows \(\$ 1,350\) of unused supplies on May 31.
3. Annual depreciation is \(\$ 3,600\) on the lodge and \(\$ 3,000\) on furniture.
4. The mortgage interest rate is \(12 \%\). (The mortgage was taken out on May 1.)
5. Unearned rent of \(\$ 1,500\) has been earned.
6. Salaries of \(\$ 300\) are accrued and unpaid at May 31.
\section*{Instructions}

(a) Journalize the adjusting entries on May 31.

(b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Use J1 as the posting reference.)

(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 balance sheet at May 31.

Transcribed Image Text:

RIVER RUN HOTEL CORP. Trial Balance May 31, 1996 Debit Credit Cash Prepaid Insurance Supplies Land Lodge Furniture $ 2,500 1,800 1,900 15,000 70,000 16,800 Accounts Payable $ 4,700 Unearned Rent Revenue 3,600 Mortgage Payable 35,000 Common Stock 60,000 Rent Revenue 9,200 Salaries Expense 3,000 Utilities Expense 1,000 Advertising Expense 500 $112,500 $112,500