Problem 4-3A The Solo Hotel opened for business on May 1, 2014. Here is its tria

Question

Problem 4-3A

The Solo Hotel opened for business on May 1, 2014. Here is its trial balance before adjustment on May 31.

SOLO HOTEL
Trial Balance
May 31, 2014 Debit Credit Cash $ 2,785 Supplies 2,600 Prepaid Insurance 1,800 Land 15,285 Buildings 76,000 Equipment 16,800 Accounts Payable $ 4,985 Unearned Rent Revenue 3,300 Mortgage Payable 42,000 Common Stock 60,285 Rent Revenue 9,000 Salaries and Wages Expense 3,000 Utilities Expense 800 Advertising Expense 500 $119,570 $119,570
Other data:

1. Insurance expires at the rate of $300 per month. 2. A count of supplies shows $1,144 of unused supplies on May 31. 3. (a) Annual depreciation is $4,320 on the building. (b) Annual depreciation is $4,200 on equipment. 4. The mortgage interest rate is 5%. (The mortgage was taken out on May 1.) 5. Unearned rent of $2,691 has been earned. 6. Salaries of $645 are accrued and unpaid at May 31. The Solo Hotel opened for business on May 1, 2014. Here is its trial balance before adjustment on May 31. Prepare an income statement for the month of May. Prepare a retained earnings statement for the month of May.

Explanation / Answer

SOLO HOTEL Income Statement For the Month Ended May 31, 2014 Rent Revenue 11,691 Less : Salaries and Wages Expense 3645 Utilities Expense 800 Advertising Expense 500 Insurance Expense 300 Depreciation (4320+4200/12) 710 Mortgage interest 175 Net profit 5,561

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