Question

Roadside Travel Court was organized on July 1, 2016, 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, 2017.

ROADSIDE TRAVEL COURT Income Statement For the Quarter Ended June 30, 2017
Revenues
Rent revenue				$211,900
Operating expenses
Advertising expense		$ 4,375
Salaries and wages expense		80,725
Utilities expense		935
Depreciation expense		2,735
Maintenance and repairs expense		4,340
Total operating expenses				93,110
Net income				$118,790

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, 2017.

Supplies		$ 8,250
Prepaid Insurance		14,400
Notes Payable		14,000

You then make inquiries and discover the following.

1.		Roadside rentals revenues include advanced rental payments received for summer occupancy, in the amount of $57,830.
2.		There were $1,900 of supplies on hand at June 30.
3.		Prepaid insurance resulted from the payment of a one-year policy on April 1, 2017.
4.		The mail in July 2017 brought the following bills: advertising for the week of June 24, $145; repairs made June 18, $4,835; and utilities for the month of June, $245.
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, 2017, and due on July 31, 2017.
7.		Income tax of $14,380 for the quarter is due in July but has not yet been recorded.

Prepare any adjusting journal entries required at June 30, 2017. (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.)

No.	Account Titles and Explanation	Debit	Credit
1.
2.
3.
4.
5.
6.
7.

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List of Accounts

  

  

Prepare a correct income statement for the quarter ended June 30, 2017.

ROADSIDE TRAVEL COURT Income Statement                                                                       For the Year Ended June 30, 2017For the Quarter Ended June 30, 2017June 30, 2017
ExpensesRevenuesTotal ExpensesTotal RevenuesNet Income / (Loss)Retained Earnings, April 1Retained Earnings, June 30Dividends
		$
ExpensesRevenuesTotal ExpensesTotal RevenuesNet Income / (Loss)Retained Earnings, April 1Retained Earnings, June 30Dividends
	$
ExpensesRevenuesTotal ExpensesTotal RevenuesNet Income / (Loss)Retained Earnings, April 1Retained Earnings, June 30Dividends
ExpensesRevenuesTotal ExpensesTotal RevenuesNet Income / (Loss)Retained Earnings, April 1Retained Earnings, June 30Dividends		$

Answer 1

Answer :-

Que 1
No,	Date	Accounts	debit	credit
1	Jun-30	Rent Revenue	57,830
		unearned Rent Revenues		57,830
2	Jun-30	Supplies expense	6,350
		supplies		6,350
		(8,250-1,900)
3	Jun-30	Insurance expense	3,600
		Prepaid insurance		3,600
		(14400*3/12)
4	Jun-30	Utilties expense	245
		Advertising expense	145
		Reapirs and maintenance expense	4,835
		Accounts payable		5,225
5	Jun-30	Salaries expense	1,200
		salaries payable		1,200
		(300*4)
6	Jun-30	Interest expense	140
		interest payable		140
		(14000*6%*2/12)
7	Jun-30	Income tax expense	14,380
		income tax payable		14,380

Ques 2
Road SIde Travel court income statement quarter ended June 30,2017.
Revenues :
Rent revenue		154,070
211,900 - 57,830
Operating expenses
Advertising expense(4,375 +145)	4,520
amortization expense	2,735
Salaries expense	81,925
80,725 +1200
utilties expense	1,180
935+245
Repairs and maintenance expense(4,340+4,835)	9,175
Supplies expense	6,350
Insurance expense	3,600
Interest expense	140
total expenses		109,625
Earnings before income taxes		44,445
Income tax expense		14,380
Net INCOME		30,065