PROBLEM 3-2B

(a)

J1
Debit
190

Date
May 31

Account Titles
Insurance Expense..............................
Prepaid Insurance ......................
($2,280 X 1/12)

Ref.
722
130

31

Supplies Expense ...............................

Supplies ($2,200 $750) ............

631
126

1,450

31

Depreciation ExpenseLodge...........
($3,000 X 1/12)
Accumulated Depreciation
Lodge ......................................

619

250

Depreciation ExpenseFurniture......
($2,700 X 1/12)
Accumulated Depreciation
Furniture .................................

621

31

Interest Expense .................................

Interest Payable..........................
[($35,000 X 12%) X 1/12]

718
230

350

31

Unearned Rent Revenue .....................

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

209
429

2,200

31

Salaries Expense.................................
Salaries Payable .........................

726
212

750

31

142

Credit
190

1,450

250
225

150

225
350

2,200

750

(b)
Cash
Date
Explanation
May 31 Balance

Ref.

Page 1 of 7

Debit

Credit

No. 101
Balance
3,500

PROBLEM 3-2B (Continued)

Supplies
Date
Explanation
May 31 Balance
31 Adjusting

Ref.

J1

Prepaid Insurance
Date
Explanation
May 31 Balance
31 Adjusting

Ref.

J1

Land
Date
Explanation
May 31 Balance

Ref.

Lodge
Date
Explanation
May 31 Balance

Ref.

Accumulated DepreciationLodge
Date
Explanation
Ref.
May 31 Adjusting
J1
Furniture
Date
Explanation
May 31 Balance

Ref.

Accumulated DepreciationFurniture
Date
Explanation
Ref.
May 31 Adjusting
J1
Page 2 of 7

Debit

Credit
1,450

Debit

Credit
190

Debit

Debit

Debit

Debit

Debit

No. 126
Balance
2,200
750
No. 130
Balance
2,280
2,090

Credit

No. 140
Balance
12,000

Credit

No. 141
Balance
60,000

Credit
250

Credit

Credit
225

No. 142
Balance
250
No. 149
Balance
15,000
No. 150
Balance
225

PROBLEM 3-2B (Continued)

Accounts Payable
Date
Explanation
May 31 Balance

Ref.

Unearned Rent Revenue

Date
Explanation
May 31 Balance
31 Adjusting

Ref.

J1

Salaries Payable
Date
Explanation
May 31 Adjusting

Ref.
J1

Interest Payable
Date
Explanation
May 31 Adjusting

Ref.
J1

Mortgage Payable
Date
Explanation
May 31 Balance

Ref.

Share CapitalOrdinary
Date
Explanation
May 31 Balance

Ref.

Rent Revenue
Date
Explanation
May 31 Balance
31 Adjusting

Ref.

J1
Page 3 of 7

Debit

Debit

Credit

Credit

2,200

Debit

Debit

Debit

Debit

Debit

No. 201
Balance
4,800
No. 209
Balance
3,300
1,100

Credit
750

No. 212
Balance
750

Credit
350

No. 230
Balance
350

Credit

No. 275
Balance
35,000

Credit

No. 311
Balance
46,380

Credit
2,200

No. 429
Balance
10,300
12,500

PROBLEM 3-2B (Continued)

Advertising Expense
Date
Explanation
May 31 Balance

Ref.

Depreciation ExpenseLodge
Date
Explanation
May 31 Adjusting
Depreciation ExpenseFurniture
Date
Explanation
May 31 Adjusting
Supplies Expense
Date
Explanation
May 31 Adjusting
Interest Expense
Date
Explanation
May 31 Adjusting
Insurance Expense
Date
Explanation
May 31 Adjusting
Salaries Expense
Date
Explanation
May 31 Balance
31 Adjusting

Ref.
J1

Ref.
J1

Ref.
J1

Ref.
J1

Ref.
J1

Ref.

J1
Page 4 of 7

Debit

Debit
250

Debit
225

Debit
1,450

Debit
350

Debit
190

Debit
750

Credit

No. 610
Balance
600

Credit

No. 619
Balance
250

Credit

No. 621
Balance
225

Credit

No. 631
Balance
1,450

Credit

No. 718
Balance
350

Credit

No. 722
Balance
190

Credit

No. 726
Balance
3,300
4,050

PROBLEM 3-2B (Continued)

Utilities Expense
Date
Explanation
May 31 Balance
(c)

Ref.

Debit

Credit

No. 732
Balance
900

MOUND VIEW MOTEL, INC.

Adjusted Trial Balance
May 31, 2011
Debit
Cash .................................................................... $ 3,500
Supplies ..............................................................
750
Prepaid Insurance ..............................................
2,090
Land ....................................................................
12,000
Lodge ..................................................................
60,000
Accumulated DepreciationLodge ..................
Furniture .............................................................
15,000
Accumulated DepreciationFurniture .............
Accounts Payable ..............................................
Unearned Rent Revenue ....................................
Salaries Payable .................................................
Interest Payable..................................................
Mortgage Payable...............................................
Share CapitalOrdinary ....................................
Rent Revenue .....................................................
Advertising Expense ..........................................
600
Depreciation ExpenseLodge..........................
250
Depreciation ExpenseFurniture.....................
225
Supplies Expense...............................................
1,450
Interest Expense.................................................
350
Insurance Expense.............................................
190
Salaries Expense................................................
4,050
Utilities Expense.................................................
900
$101,355

Page 5 of 7

Credit

250
225
4,800
1,100
750
350
35,000
46,380
12,500

$101,355

PROBLEM 3-2B (Continued)

(d)

MOUND VIEW MOTEL, INC.

Income Statement
For the Month Ended May 31, 2011
Revenues
Rent revenue ...................................................
Expenses
Salaries expense .............................................
Supplies expense............................................
Utilities expense..............................................
Advertising expense .......................................
Interest expense..............................................
Depreciation expenselodge ........................
Depreciation expensefurniture ...................
Insurance expense..........................................
Total expenses.........................................
Net income ..............................................................

$12,500
$4,050
1,450
900
600
350
250
225
190

8,015
$ 4,485

MOUND VIEW MOTEL, INC.

Retained Earnings Statement
For the Month Ended May 31, 2011
Retained Earnings, May 1 .......................................................
Add: Net income ....................................................................
Retained Earnings, May 31 .....................................................

Page 6 of 7

0
4,485
$4,485

PROBLEM 3-2B (Continued)

MOUND VIEW MOTEL, INC.
Statement of Financial Position
May 31, 2011
Assets
Land....................................................................
Lodge..................................................................
Less: Accumulated depreciationlodge ........
Furniture.............................................................
Less: Accumulated depreciationfurniture .....
Prepaid insurance..............................................
Supplies .............................................................
Cash....................................................................
Total assets.........................................

$60,000
250
15,000
225

$12,000
59,750
14,775
2,090
750
3,500
$92,865

Equity and Liabilities

Equity
Share capitalordinary .............................
Retained earnings ......................................
Liabilities
Accounts payable ......................................
Mortgage payable.......................................
Unearned rent.............................................
Salaries payable .........................................
Interest payable..........................................
Total equity and liabilities ...................................

Page 7 of 7

$46,380
4,485
4,800
35,000
1,100
750
350

$50,865

42,000
$92,865