Question

The Moto Hotel opened for business on May 1, 2017. Here is its trial balance before adjustment on May 31.

MOTO HOTEL Trial Balance May 31, 2017

Debit Credit
Cash $2,523
Supplies 2,600
Prepaid Insurance 1,800
Land 15,023
Buildings 67,600
Equipment 16,800
Accounts Payable $4,723
Unearned Rent Revenue 3,300
Mortgage Payable 33,600
Common Stock 60,023
Rent Revenue 9,000
Salaries and Wages Expense 3,000
Utilities Expense 800
Advertising Expense 500
$110,646 $110,646

Other data:
1. Insurance expires at the rate of $450 per month.
2. A count of supplies shows $1,140 of unused supplies on May 31.
3. (a) Annual depreciation is $2,880 on the building.
(b) Annual depreciation is $2,280 on equipment.
4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.)
5. Unearned rent of $2,510 has been earned.
6. Salaries of $880 are accrued and unpaid at May 31.

Required:
Journalize the adjusting entries on May 31.

Answer 1

1. Insurance expires at the rate of $450 per month.

Dr Insurance expense 450

Cr Prepaid insurance 450

2. A count of supplies shows $1,140 of unused supplies on May 31.

Dr Supplies expense 1,460

Cr Supplies 1,460

3. (a) Annual depreciation is $2,880 on the building.

Dr Depreciation expense 240

Cr Accumulated depreciation, building 240

(b) Annual depreciation is $2,280 on equipment.

Dr Depreciation expense 240

Cr Accumulated depreciation, equipment 190

4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.)

Dr Interest expense 168

Cr Interest payable 168

5. Unearned rent of $2,510 has been earned.

Dr unearned revenue 2,510

Cr Rent revenue 2,510

6. Salaries of $880 are accrued and unpaid at May 31.

Dr Wages expense 880

Cr Wages payable 880