Exercise 2

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Week 4

Week 4:
BE4-2, E4-9 & P4-3A P4-3A: [50 pts]
Total Points: 100 A: Adjusting Journal Entries (15pts)
1 May 31 Insurance Expense
BE4-2: [25 pts] Prepaid Insurance
Explain why each account may require adjustment. 2 May 31 Supplies Expense
[Be as complete/detailed as possible and add space to write you answers if you need.] Supplies
(a) Prepaid Insurance: 3 May 31 Depreciation Expense
Accumulated Depreciation - Bldg
Depreciation Expense
Accumulated Depreciation - Equip
(b) Depreciation Expense: 4 May 31 Interest Expense
Interest payable
5 May 31 Unearned Rent Revenue
Rent Revenue
(c) Unearned Service Revenue: 6 May 31 Salaries & Wages Expense
Salaries & Wages Payable
(d) Interest Payable:
B: T-Accounts (10pts)
E4-9: [25 pts]
Adjusting Journal Entries Cash Interest payable
Date Account Titles Debit Credit 5/31 Bal. 5/31
March 31 Depreciation expense 5/31 Bal.
Accumulated depreciation
31 Unearned rent revenue Prepaid Insurance Mortgage payable
Rent revenue 5/31 5/31 5/31 Bal.
31 Interest expense 5/31 Bal.
Interest payable
31 Supplies expense Supplies Common Stock
Supplies 5/31 5/31 5/31 Bal.
31 Insurance expense 5/31 Bal.
Prepaid Insurance
Land Rent Revenue
HINT: Remember you are recording these Adjusting Journal Entries on a 5/31 Bal. 5/31
Quarterly basis. (3 months = 1 quarter) 5/31
5/31 Bal.
Building
5/31 Bal. Salaries & Wages expense
5/31
5/31
Accum. Depr - Bldg 5/31 Bal.
5/31
5/31 Bal.
Utilities expense
Equipment 5/31 Bal.
5/31 Bal.
Advertising expense
5/31 Bal.
Accum. Depr - Equip.
5/31
5/31 Bal. Interest expense
5/31
Accounts payable 5/31 Bal.
5/31 Bal.
Insurance expense
5/31
Unearned Rent Rev. 5/31 Bal.
5/31 5/31
5/31 Bal. Supplies expense
5/31
Salaries & Wages payable 5/31 Bal.
5/31
5/31 Bal. Depreciation expense
5/31
5/31
5/31 Bal.
(C ) Adjusted Trial Balance (10pts)
Vang Hotel
Adjusted Trial Balance
May 31, 2012
Debit Credit
Cash
Prepaid Insurance
Supplies
Land
Building
Accumulated depreciation - building
Equipment
Accumulated depreciation - equipment
Accounts payable
Unearned rent revenue
Salaries & wages payable
Interest payable
Mortgage payable
Common stock
Rent Revenue
Salaries & wages expense
Utilities expense
Advertising expense
Interest expense
Insurance expense
Supplies expense
Depreciation expense
(D) Financial Statements (10pts)
Vang Hotel
Income Statement
For the Month Ended May 31, 2012
Revenues
Rent revenues
Expenses
Salaries and wages expense
Supplies expense
Utilities expense
Depreciation expense
Advertising expense
Insurance expense
Interest expense
Total expenses
Net income
Vang Hotel
Retained Earnings Statement
For the Month Ended May 31, 2012
Retained earnings, May 1
Add: Net income
Retained earnings, May 31
Vang Hotel
Balance Sheet
May 31, 2012
Assets
Current assets
Cash
Supplies
Prepaid insurance
Total current assets
Property, Plant and Equipment
Building
Less: Accum. Depr. - Bldg
Equipment
Less: Accum. Depr. - Equip.
Land
Total assets
Liabilites and Stockholders' Equity
Current Liabilities
Accounts payable
Salaries and wages payable
Unearned rent revenue
Interst payable
Total current liabilities
Long-term Liabilities
Mortgage payable
Total liabilities
Stockholders' equity
Common stock
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
(E) Accounts needed to be closed (5pts)