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The Olathe Hotel opened for business on

Price: $2.50

The Olathe Hotel opened for business on May 1, 2010. Here is its trial balance
before adjustment on May 31.

Trial Balance
Cash   2,500
Prepaid Insurance   1,800
Supplies   2,600
Land   15,000
Lodge   70,000
Furniture   16,800
Accounts Payable   4,700
Unearned Rent Revenue   3,300
Mortgage Payable   36,000
Common Stock   60,000
Rent Revenue   9,000
Salaries Expense   3,000
Utilities Expense   800
Advertising Expense   500  
   113,000  113,000
Other data:
1. Insurance expires at the rate of $300 per month.
2. A count of supplies shows $1,050 of unused supplies on May 31.
3. Annual depreciation is $3,600 on the lodge and $3,000 on furniture.
4. The mortgage interest rate is 7%. (The mortgage was taken out on May 1.)
5. Unearned rent of $2,500 has been earned.
6. Salaries of $750 are accrued and unpaid at May 31.

(a) Journalize the adjusting entries on May 31.
(b) Prepare a ledger using T accounts. Enter the trial balance amounts and post the adjusting
(c) Prepare an adjusted trial balance on May 31.
(d) Prepare an income statement and a retained earnings statement for the month of
May and a classified balance sheet at May 31.
(e) Identify which accounts should be closed on May 31.

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