PROBLEM 3-1A

(a)
J4
Date Account Titles Ref. Debit Credit
2014
May 31 Supplies Expense ............................... 631 900
Supplies ...................................... 126 900

31 Utilities Expense ................................. 736 250

Accounts Payable ...................... 201 250

31 Insurance Expense ............................. 722 150

Prepaid Insurance
($3,600 ÷ 24 months) .............. 130 150

31 Unearned Service Revenue ................ 209 1,600

Service Revenue
($2,000 – $400)........................ 400 1,600

31 Salaries and Wages Expense ............. 726 1,080

Salaries and Wages Payable
[(3/5 X $900) X
2 employees] .......................... 212 1,080

31 Depreciation Expense......................... 717 190

Accumulated Depreciation—
Equipment .............................. 150 190

31 Accounts Receivable .......................... 112 1,700

Service Revenue ........................ 400 1,700

(b)
Cash No. 101
Date Explanation Ref. Debit Credit Balance
2014
May 31 Balance  4,500
PROBLEM 3-1A (Continued)

Accounts Receivable No. 112

Date Explanation Ref. Debit Credit Balance
2014
May 31 Balance  6,000
31 Adjusting J4 1,700 7,700

Supplies No. 126

Date Explanation Ref. Debit Credit Balance
2014
May 31 Balance  1,900
31 Adjusting J4 900 1,000

Prepaid Insurance No. 130

Date Explanation Ref. Debit Credit Balance
2014
May 31 Balance  3,600
31 Adjusting J4 150 3,450

Equipment No. 149

Date Explanation Ref. Debit Credit Balance
2014
May 31 Balance  11,400

Accumulated Depreciation—Equipment No. 150

Date Explanation Ref. Debit Credit Balance
2014
May 31 Adjusting J4 190 190
PROBLEM 3-1A (Continued)

Accounts Payable No. 201

Date Explanation Ref. Debit Credit Balance
2014
May 31 Balance  4,500
31 Adjusting J4 250 4,750

Unearned Service Revenue No. 209

Date Explanation Ref. Debit Credit Balance
2014
May 31 Balance  2,000
31 Adjusting J4 1,600 400

Salaries and Wages Payable No. 212

Date Explanation Ref. Debit Credit Balance
2014
May 31 Adjusting J4 1,080 1,080

Owner’s Capital No. 301

Date Explanation Ref. Debit Credit Balance
2014
May 31 Balance  17,700

Service Revenue No. 400

Date Explanation Ref. Debit Credit Balance
2014
May 31 Balance  7,500
31 Adjusting J4 1,600 9,100
31 Adjusting J4 1,700 10,800

Supplies Expense No. 631

Date Explanation Ref. Debit Credit Balance
2014
May 31 Adjusting J4 900 900

PROBLEM 3-1A (Continued)

Depreciation Expense No. 717
Date Explanation Ref. Debit Credit Balance
2014
May 31 Adjusting J4 190 190

Insurance Expense No. 722

Date Explanation Ref. Debit Credit Balance
2014
May 31 Adjusting J4 150 150

Salaries and Wages Expense 726

Date Explanation Ref. Debit Credit Balance
2014
May 31 Balance  3,400
31 Adjusting J4 1,080 4,480

Rent Expense No. 729

Date Explanation Ref. Debit Credit Balance
2014
May 31 Balance  900

Utilities Expense No. 736

Date Explanation Ref. Debit Credit Balance
2014
May 31 Adjusting J4 250 250
PROBLEM 3-1A (Continued)

(c) NARDELLI CONSULTING

Adjusted Trial Balance
May 31, 2014

Debit Credit
Cash .................................................................... $ 4,500
Accounts Receivable ......................................... 7,700
Supplies .............................................................. Prepaid
1,000 Insurance
Prepaid Insurance .............................................. 3,450
Equipment .......................................................... 11,400
Accumulated Depreciation—
Equipment ...................................................... $ 190
Accounts Payable .............................................. 4,750
Unearned Service Revenue ............................... 400
Salaries and Wages Payable ............................. 1,080
Owner’s Capital .................................................. 17,700
Service Revenue ................................................ 10,800
Salaries and Wages Expense ............................ 4,480
Rent Expense ..................................................... 900
Depreciation Expense........................................ 190
Insurance Expense ............................................ 150
Utilities Expense ................................................ 250
Supplies Expense .............................................. 900
$34,920 $34,920
 PROBLEM 3-2A

(a)
J1
Date Account Titles Ref. Debit Credit
May 31 Insurance Expense .............................. 722 200
Prepaid Insurance
($2,400 X 1/12) ......................... 130 200

31 Supplies Expense ................................ 631 1,330

Supplies ($2,080 – $750) ............. 126 1,330

31 Depreciation Expense
($3,000 X 1/12) + ($1,500 X 1/12) ...... 619 375
Accumulated Depreciation—
Buildings ................................. 142 250
Accumulated Depreciation—
Equipment ............................... 150 125

31 Interest Expense .................................. 718 400

Interest Payable
[($40,000 X 12%) X 1/12] ........... 230 400

31 Unearned Rent Revenue...................... 208 2,200

Rent Revenue
(2/3 X $3,300) .......................... 429 2,200

31 Salaries and Wages Expense .............. 726 750

Salaries and Wages Payable ...... 212 750

(b)

Cash No. 101

Date Explanation Ref. Debit Credit Balance
May 31 Balance  3,500
PROBLEM 3-2A (Continued)

Supplies No. 126

Date Explanation Ref. Debit Credit Balance
May 31 Balance  2,080
31 Adjusting J1 1,330 750

Prepaid Insurance No. 130

Date Explanation Ref. Debit Credit Balance
May 31 Balance  2,400
31 Adjusting J1 200 2,200

Land No. 140

Date Explanation Ref. Debit Credit Balance
May 31 Balance  12,000

Buildings No. 141

Date Explanation Ref. Debit Credit Balance
May 31 Balance  60,000

Accumulated Depreciation—Buildings No. 142

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 250 250

Equipment No. 149

Date Explanation Ref. Debit Credit Balance
May 31 Balance  15,000

Accumulated Depreciation—Equipment No. 150

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 125 125
PROBLEM 3-2A (Continued)

Accounts Payable No. 201

Date Explanation Ref. Debit Credit Balance
May 31 Balance  4,800

Unearned Rent Revenue No. 208

Date Explanation Ref. Debit Credit Balance
May 31 Balance  3,300
31 Adjusting J1 2,200 1,100

Salaries and Wages Payable No. 212

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 750 750

Interest Payable No. 230

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 400 400

Mortgage Payable No. 275

Date Explanation Ref. Debit Credit Balance
May 31 Balance  40,000

Owner’s Capital No. 301

Date Explanation Ref. Debit Credit Balance
May 31 Balance  41,380

Rent Revenue No. 429

Date Explanation Ref. Debit Credit Balance
May 31 Balance  10,300
31 Adjusting J1 2,200 12,500
PROBLEM 3-2A (Continued)

Advertising Expense No. 610

Date Explanation Ref. Debit Credit Balance
May 31 Balance  600

Depreciation Expense No. 619

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 375 375

Supplies Expense No. 631

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 1,330 1,330

Interest Expense No. 718

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 400 400

Insurance Expense No. 722

Date Explanation Ref. Debit Credit Balance
May 31 Adjusting J1 200 200

Salaries and Wages Expense No. 726

Date Explanation Ref. Debit Credit Balance
May 31 Balance  3,300
31 Adjusting J1 750 4,050

Utilities Expense No. 732

Date Explanation Ref. Debit Credit Balance
May 31 Balance  900

PROBLEM 3-2A (Continued)

(c) SKYLINE MOTEL
Adjusted Trial Balance
May 31, 2014

Debit Credit
Cash .................................................................... $ 3,500
Supplies .............................................................. 750
Prepaid Insurance .............................................. 2,200
Land .................................................................... 12,000
Buildings ............................................................ 60,000
Accumulated Depreciation—Buildings ............ $ 250
Equipment .......................................................... 15,000
Accumulated Depreciation—Equipment .......... 125
Accounts Payable .............................................. 4,800
Unearned Rent Revenue .................................... 1,100
Salaries and Wages Payable ............................. 750
Interest Payable ................................................. 400
Mortgage Payable .............................................. 40,000
Owner’s Capital .................................................. 41,380
Rent Revenue ..................................................... 12,500
Advertising Expense.......................................... 600
Depreciation Expense........................................ 375
Supplies Expense .............................................. 1,330
Interest Expense ................................................ 400
Insurance Expense ............................................ 200
Salaries and Wages Expense ............................ 4,050
Utilities Expense ................................................ 900
$101,305 $101,305
PROBLEM 3-2A (Continued)

(d) SKYLINE MOTEL

Income Statement
For the Month Ended May 31, 2014

Revenues
Rent revenue ................................................... $12,500
Expenses
Salaries and wages expense.......................... $4,050
Supplies expense ........................................... 1,330
Utilities expense ............................................. 900
Advertising expense ....................................... 600
Interest expense ............................................. 400
Depreciation expense ..................................... 375
Insurance expense ......................................... 200
Total expenses ........................................ 7,855
Net income .............................................................. $ 4,645

SKYLINE MOTEL
Owner’s Equity Statement
For the Month Ended May 31, 2014

Owner’s capital, May 1 ............................................................ $ 0

Investment by owner ............................................................... 41,380
41,380
Add: Net income .................................................................... 4,645
Owner’s capital, May 31 .......................................................... $46,025
PROBLEM 3-2A (Continued)

SKYLINE MOTEL
Balance Sheet
May 31, 2014

Assets
Cash ................................................................... $ 3,500
Supplies ............................................................. 750
Prepaid insurance ............................................. 2,200
Land ................................................................... 12,000
Buildings ............................................................ $60,000
Less: Accumulated depreciation—
buildings ................................................. 250 59,750
Equipment.......................................................... 15,000
Less: Accumulated depreciation—
equipment ............................................... 125 14,875
Total assets ........................................ $93,075

Liabilities and Owner’s Equity

Liabilities
Accounts payable ...................................... $ 4,800
Unearned rent revenue .............................. 1,100
Salaries and wages payable ..................... 750
Interest payable ......................................... 400
Mortgage payable ...................................... 40,000
Total liabilities .................................... 47,050
Owner’s equity
Owner’s capital .......................................... 46,025
Total liabilities and owner’s equity ...... $93,075