The Mound View Motel opened for business on May 1, 2008. Its trial balance befor adjustment on May 31 is as follows.
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Mound View Motel |
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Trial Balance |
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May 31, 2008 |
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Account |
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Number |
Debit |
Credit |
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Cash |
$3,500 |
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Supplies |
$2,200 |
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Prepaid insurance |
$2,280 |
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Land |
$12,000 |
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Lodge |
$60,000 |
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Furniture |
$15,000 |
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Accounts Payable |
$4,800 |
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Unearned rent |
$3,300 |
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Mortgage payable |
$35,000 |
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Capital |
46,380 |
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Rent revenue |
10,300 |
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Advertising expense |
$600 |
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Salary expense |
$3,300 |
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Utilities expense |
$900 |
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99,780 |
Other data:
- Prepaid insurance is a 1 year policy starting May 1, 2008.
- A count of supplies shows $750 of unused supplies on May 31.
- Annual depreciation is $3,000 on the lodge and $2,700 on furniture.
- The mortgage interest rate is 12% (the mortgage was taken out on May 1.)
- Two third of the unearned rent has been earned.
- Salaries of $750 are accrued and unpaid at May 31.
Required:
- Journalize the adjusting entries on May 31.
- Prepare an adjusted trial balance on May 31.
- Prepare an income statement and an owner”s equity statement for the month of May and a balance sheet at May 31.