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The Elston Motel, Inc. opened for business on May 1, 2008

The Elston Motel, Inc. opened for business on May 1, 2008
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Price: $19.99
Availability: In Stock
Model: A
Average Rating: 5 out of 5 Stars!


Solution Guide / Answer Key:


P3-2B The Elston Motel, Inc. opened for business on May 1, 2008. Its trial balance before adjustment on May 31 is as follows.

Trial Balance
May 31, 2008
Number Debit Credit
101 Cash $ 2,500
126 Supplies 1,900
130 Prepaid Insurance 2,400
140 Land 15,000
141 Lodge 70,000
149 Furniture 16,800
201 Accounts Payable $ 5,300
208 Unearned Rent 3,600
275 Mortgage Payable 40,000
311 Common Stock 55,000
429 Rent Revenue 9,200
610 Advertising Expense 500
726 Salaries Expense 3,000
732 Utilities Expense 1,000
TOTAL $113,100 $113,100

In addition to those accounts listed on the trial balance, the chart of accounts for Elston Motel also contains the following accounts and account numbers: No. 142 Accumulated Depreciation- Lodge, No. 150 Accumulated Depreciation-Furniture, No. 212 Salaries Payable,No. 230 Interest Payable,No. 320 Retained Earnings,No. 619 Depreciation Expense- Lodge, No. 621 Depreciation Expense-Furniture, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

Other data:
1. Insurance expires at the rate of $200 per month.
2. A count of supplies shows $500 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 $2,500 has been earned.
6. Salaries of $800 are accrued and unpaid at May 31.

(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.



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