Adjusting the Accounts

Mac's Motel opened for business on May 1, 2019. Its trial balance before adjustment on May 31 is as follows.
MAC'S MOTEL
Trial Balance
May 31, 2019
In addition to those accounts listed on the trial balance, the chart of accounts for Mac's Motel also contains the following accounts and account numbers: No. 142 Accumulated Depreciation-Buildings, 150 Accumulated Depreciation-Equipment, No. 212 Salaries and Wages Payable,No. 230 Interest Payable, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

Other data

  1. Prepaid insurance is a 1-year policy starting May 1, 2019.
  2. A count of supplies shows $750 of unused supplies on May 31.
  3. Annual depreciation is $3,000 on the buildings and $1,500 on equipment.
  4. The mortgage interest rate is 12%. (the mortgage was taken ot on May 1.)
  5. Two-thirds of the unearned rent revenue has been earned.
  6. Salaries of $750 are accrued and unpaid at May 31.

Instructions

  1. Prepare the adjusting entries on May 31.
  2. Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusted entries. (Use J1 as the posting reference.)
  3. Prepare an adjusted trial balance at May 31, 2019
  4. Prepare an income statement and an owner's equity statement for the month of May and a balance sheet at May 31.

Answer

a.
MAC'S MOTEL
Adjusting Journal Entries
b.
MAC'S MOTEL
General Ledger
c.
MAC'S MOTEL
Adjusted Trial Balance
May 31, 2019
d.
MAC'S MOTEL
Income Statement
For the Month Ended May 31, 2019
MAC'S MOTEL
Owner's Equity Statement
For the Month Ended May 31, 2019
MAC'S MOTEL
Balance Sheet
May 31, 2019

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