Question

Blossom Travel Court was organized on July 1, 2021, by Betty Johnson. Betty is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Betty prepared the following income statement for her fourth quarter, which ended June 30, 2022.

BLOSSOM TRAVEL COURT Income Statement For the Quarter Ended June 30, 2022
Revenues
Rent revenue				$217,500
Operating expenses
Advertising expense		$ 3,930
Salaries and wages expense		85,240
Utilities expense		920
Depreciation expense		3,070
Maintenance and repairs expense		4,245
Total operating expenses				97,405
Net income				$120,095

Betty suspected that something was wrong with the statement because net income had never exceeded $30,000 in any one quarter. Knowing that you are an experienced accountant, she asks you to review the income statement and other data.

You first look at the trial balance. In addition to the account balances reported above in the income statement, the trial balance contains the following additional selected balances at June 30, 2022.

Supplies		$ 9,095
Prepaid Insurance		14,400
Notes Payable		14,000

You then make inquiries and discover the following.

1.		Blossom rentals revenues include advanced rental payments received for summer occupancy, in the amount of $57,070.
2.		There were $1,935 of supplies on hand at June 30.
3.		Prepaid insurance resulted from the payment of a one-year policy on April 1, 2022.
4.		The mail in July 2022 brought the following bills: advertising for the week of June 24, $115; repairs made June 18, $4,790; and utilities for the month of June, $225.
5.		Wages expense is $300 per day. At June 30, four days’ wages have been incurred but not paid.
6.		The note payable is a 6% note dated May 1, 2022, and due on July 31, 2022.
7.		Income tax of $13,550 for the quarter is due in July but has not yet been recorded.

(a)

Prepare any adjusting journal entries required at June 30, 2022. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

Journal entries
Date	Account Details	Debit	Credit
June 30, 2020	Rent Revenue	57050
	Unearned Revenue		57050
	To record adjustment for advance apyment
June 30, 2020	Supplies Expenses	7160
	Supplies		7160
	To record supples expenses
June 30, 2020	Insurance Expenses	3600
	Prepaid expenses		3600
	To adjusting entry for recording insurance
June 30, 2020	Repairs	4790
	Utilities	225
	Salaries and wages	1200
	Advertisment Expenses	115
	Expenses Payable		6330
	To record expenses incurred but not paid
June 30, 2020	Interest Expenses	140
	Interest Payable		140
	To record interest due
June 30, 2020	Income Tax	13550
	Provision for income tax		13550
	To record taxes due

Adjustments
Rent Revenue=	217500-57050=	160450
Supplies Expenses=	9095-1935=	7160
Insurance Expenses=	14400*3/12=	3600
Advertisment Expenses=	3930+115=	4045
Repairs=	4245+4790=	9035
Utlities=	920+225=	1145
Salaries and Wages=	85240+1200=	86440
Interest Expenses=	14000*6%*2/12=	140