Question

A: Prepare a balance sheet at May 31. (List Assets in order of liquidity. List Property, plant and equipment in order of land, buildings and equipment. Round answers to 0 decimal places, e.g. 5,275.)

B: Prepare an income statement for the month of May 31. (Round answers to 0 decimal places, e.g. 5,275.)

The Skyline Motel opened for business on May 1, 2017. Its trial balance before adjustment on May 31 is as follows.

SKYLINE MOTEL Trial Balance May 31, 2017
Account Number				Debit		Credit
101		Cash		$ 3,600
126		Supplies		2,050
130		Prepaid Insurance		3,000
140		Land		12,000
141		Buildings		62,400
149		Equipment		15,400
201		Accounts Payable				$ 11,700
208		Unearned Rent Revenue				3,000
275		Mortgage Payable				40,000
311		Common Stock				36,000
429		Rent Revenue				12,500
610		Advertising Expense		600
726		Salaries and Wages Expense		3,300
732		Utilities Expense		850
				$103,200		$103,200

In addition to those accounts listed on the trial balance, the chart of accounts for Skyline Motel also contains the following accounts and account numbers: No. 142 Accumulated Depreciation—Buildings, No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 619 Depreciation Expense, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

Other data:

1.		Prepaid insurance is a 1-year policy starting May 1, 2017.
2.		A count of supplies shows $800 of unused supplies on May 31.
3.		Annual depreciation is $3,120 on the buildings and $1,536 on equipment.
4.		The mortgage interest rate is 12%. (The mortgage was taken out on May 1.)
5.		Two-thirds of the unearned rent revenue has been earned.
6.		Salaries of $800 are accrued and unpaid at May 31.

Answer 1

Working
No.	Date	Account Titles and Explanation	Debit	Credit
1	31-May	Insurance Expense	250
		Prepaid Insurance (3000/12)		250
		(To expired insurance)
2	31-May	Supplies expenses (2050-800)	1,250
		Supplies		1,250
		(To record supplies used)
3	31-May	Depreciation Expense	4,656
		Accumulated Depreciation—Buildings,		3,120
		Accumulated Depreciation—Equipment		1536
4	31-May	Interest Expense (40000*12%*1/12)	400
		Interest Payable		400
		(To record interest accrued on the note)
5	31-May	Unearned Rent Revenue	2,000
		Rent Revenue (3000*2/3)		2,000
		(To record service revenue earned)
6	31-May	Salaries and Wages Expense	800
		Salaries and Wages Payable		800
		(To record accrued wages)
	ans	Income Statement
		For the year ended May 31 2017
		Rent Revenue		14,500
		Less: Operating expenses
		Salaries and Wages Expense	4,100
		Insurance Expense	250
		Depreciation Expense	4,656
		Supplies Expense	1,250
		Advertising expenses	600
		Utilities expenses	850
		Total operating expenses		11,706
		Net Operating Income		2,794
		Interest Expense		400
		Net Income		2,394
	ans	Balance Sheet
		For the year ended May 31 2017
		Assets
		Current Assets
		Cash		$3,600
		Supplies		$800
		Prepaid Insurance		$2,750
		Total current assets		$7,150
		Property Plant & Equipment
		Land		12000
		Building	62,400
		Accumulated Depreciation-Building	$3,120	$59,280
		Equipment	15,400
		Accumulated Depreciation-Equipment	$1,536	$13,864
		Total Property Plant & Equipment		$85,144
		Total Assets		$92,294
		Liabilities & Stockholder Equity
		Current Liabilities
		Accounts Payable		11,700
		Interest Payable		400
		Unearned Service Revenue		1,000
		Salaries and Wages Payable		800
		Total Current Liabilities		13,900
		Mortgage Payable		40,000
		Total Liabilities		53,900
		Stockholder Equity
		Common Stock	36000
		Retained Earnings	2,394
		Total Stockholder Equity		38,394
		Total Liabilities & Stockholder Equity		92,294