Question 1

a. Journalize the adjusting entries on May 31.

Date Account Titles and Explanation Ref Debit Credit

May 31 Insurance Expense 722 200
Prepaid Insurance 130 200
(2400/12 = 200)
May 31 Supplies Expense 631 1330
Supplies 126 1330
(2080 – 750 = 1330)
May 31 Depreciation Expense 619 300
Accumulated Depreciation – Building 142 300
(3600/12 = 300)
May 31 Depreciation Expense 619 125
Accumulated Depreciation – Equipment 150 125
(1500/12 = 125)
May 31 Interest Expense 718 200
Interest Payable 230 200
(6/100 X 40000 X 1/12 = 200)
May 31 Unearned Rent Revenue 208 2200
Rent Revenue 429 2200
(2/3 X 3300 = 2200)
May 31 Salaries and Wages Expense 726 750
Salaries and Wages Payable 212 750

b. Prepare a ledger using the three-column form of account.

Insurance Expense NO 722

Date Explanation Ref Debit Credit Balance
May 31 Adjusting J1 200 200

Prepaid Insurance NO 130

Date Explanation Ref Debit Credit Balance
May 31 Balance / 2,400 2,400
May 31 Adjusting J1 200 2,200

Supplies Expense NO 631

Date Explanation Ref Debit Credit Balance
May 31 Adjusting J1 1,330 1,330

Supplies NO 126
Date Explanation Ref Debit Credit Balance
May 31 Balance / 2,080 2,080
May 31 Adjusting J1 1,330 750
Depreciation Expense NO 619
Date Explanation Ref Debit Credit Balance
May 31 Adjusting J1 300 300
May 31 Adjusting J1 125 425

Accumulated Depreciation – Building NO 142

Date Explanation Ref Debit Credit Balance
May 31 Adjusting J1 300 300

Accumulated depreciation – Equipment NO 150

Date Explanation Ref Debit Credit Balance
May 31 Adjusting J1 125 125

Interest Expense NO 718

Date Explanation Ref Debit Credit Balance
May 31 Adjusting J1 200 200

Interest Payable NO 230

Date Explanation Ref Debit Credit Balance
May 31 Adjusting J1 200 200

Unearned Rent Revenue NO 208

Date Explanation Ref Debit Credit Balance
May 31 Balance / 3,300 3,300
May 31 Adjusting J1 2,200 1,100

Rent Revenue NO 429

Date Explanation Ref Debit Credit Balance
May 31 Balance / 10,300 10,300
May 31 Adjusting J1 2,200 12,500

Salaries and Wages Expense NO 726

Date Explanation Ref Debit Credit Balance
May 31 Balance / 3,300 3,300
May 31 Adjusting J1 750 4,050

Salaries and Wages Payable NO 212

Date Explanation Ref Debit Credit Balance
May 31 Adjusting J1 750 750
c. Adjusted trial balance on May 31.

Hank’s Hotel
Trial Balance
May 31, 2020
Unadjusted Adjustments Adjusted Trial
Trial Balance
Balance
AC Account Title Debit Credit Debit Credit Debit Credit
C
NO
101 Cash 3,400 3,400
126 Supplies 2,080 1,330 750
130 Prepaid Insurance 2,400 200 2,200
140 Land 12,000 12,000
141 Building 60,000 60,000
149 Equipment 15,000 15,000
142 Accumulated Depreciation 0 300 300
- Building
150 Accumulated Depreciation 0 125 125
- Equipment
201 Account Payable 4,700 4,700
208 Unearned Rent Revenue 3,300 2,200 1,100
212 Salaries and Wages Payable 0 750 750
230 Interest Payable 0 200 200
275 Mortgage Payable 40,000 40,000
301 Hank’s, Capital 41,380 41,380
429 Rent Revenue 10,300 2,200 12,500
610 Advertising Expense 600 600
619 Depreciation Expense 0 425 425
631 Supplies Expense 0 1,330 1,320
718 Interest Expense 0 200 200
722 Insurance Expense 0 200 200
726 Salaries and Wages Expense 3,300 750 4,050
732 Utilities Expense 900 900
TOTAL 99,680 99,680 5,105 5,105 101,055 101,055

d. Prepare an income statement and an owner’s equity statement for the month of May and a
balance sheet at May 31.

i) Income Statement

Hank’s Hotel
Income Statement
For Month Ended May 31, 2020
Revenue
Rent revenue 12,500
Total Revenue 12,500
Expense
Advertising Expense 600
 Depreciation Expense 425
Supplies Expense 1,330
Salaries and Wages Expense 4,050
Utilities Expense 900
Interest Expense 200
Insurance Expense 200
Total Expense 7,705
Net Income 4,795

ii) Owner’s Equity Statement

Hank’s Hotel
Statement of Changes in Equity
For Month Ended
Hank, Capital, May 1 0
Add: Investment by Owner 41,380
Net Profit 4,795 46,175
46,175
Less: Withdrawal by owner 0
Hank, Capital, May 31 46,175

iii) Balance Sheet

Hank’s Hotel
Balance sheet
As at 31 May 2021
Current assets
Cash 3,400

Non-current assets
Supplies 750
Prepaid insurance 2,200
Land 12,000
Buildings 60,000
Accumulated depreciation-building (300)
59,700
Equipment 15,000
Accumulated depreciation-equipment (125)
14,875
Total non-current assets 89,525
Total assets 92,925

Current liability
Accounts payable 4,700
Unearned rent revenue 1,100
Interest payable 200
Salaries and wages payable 750
Total current liability 6,750
Non-current liability
Mortgage payable 40,000
46,750
Equity
Owner’s capital 46,175
Total liability and equity 92,925
QUESTION 2

a. Enter the November 1 balances in the ledger accounts.

Date Accounts title Debit Credit
Nov 8 Salaries and wages expense 1,000
Salaries and wages payable 700
Cash 1,700

10 Cash 3,620
Accounts receivable 3,620

12 Cash 3,100
Service revenue 3,100

15 Equipment 2,000
Accounts payable 2,000

17 Supplies 700
Accounts payable 700

20 Accounts payable 2,700

Cash 2,700

22 Rent expense 400

Cash 400

25 Salaries and wages expense 1,700

Cash 1,700

27 Accounts receivable 2,200

Service revenue 2,200

29 Cash 600
Unearned service 600

b. Journalize the November transactions.

Cash NO. 101
Date Accounts title Ref Debit Credit Balance
Nov 1 Balance J1 2,400 2,400
8 Salaries and wages expense 726 1,000 1,400
Salaries and wages payable J1 700 700
10 Accounts receivable J1 3,620 4,320
12 Service revenue 407 3,100 7,420
20 Accounts payable J1 2,700 4,720
22 Rent expense 729 400 4,320
25 Salaries and wages expense 726 1,700 2,620
29 Unearned revenue J1 600 3,220
c. Post to the ledger accounts

Accounts receivable NO. 112

Date Accounts title Ref Debit Credit Balance
Nov 1 Balance J1 4,250 4,250
10 Cash J1 3,620 630
27 Service revenue J1 2,200 2,830

Supplies NO. 126

Date Accounts title Ref Debit Credit Balance
Nov 1 Balance J1 1,800 1,800
17 Accounts payable J1 700 2,500
30 Supplies expense (adjustment) J1 1,100 1,400

Equipment NO. 153

Date Accounts title Ref Debit Credit Balance
Nov 1 Balance J1 12,000 12,000
15 Accounts payable J1 2,000 14,000

Accumulated depreciation-equipment NO. 154

Date Accounts title Ref Debit Credit Balance
Nov 1 Balance J1 2,000 2,000
30 Depreciation expense (adjustment) J1 200 2,200

Accounts payable NO. 201

Date Accounts title Ref Debit Credit Balance
Nov 1 Balance J1 2,600 2,600
15 Equipment J1 2,000 4,600
17 Supplies J1 700 5,300
20 Cash J1 2,700 2,600

Unearned service revenue NO. 209

Date Accounts title Ref Debit Credit Balance
Nov 1 Balance J1 1,200 1,200
29 cash J1 600 1,800
30 Service revenue (adjustment) J1 1,220 580

Salaries and wages payable NO. 212

Date Accounts title Ref Debit Credit Balance
Nov 1 Balance J1 700 700
8 cash J1 700 0
30 Salaries and wages expense J1 350 350
(adjustment)
 Owner’s capital NO. 301
Date Accounts title Ref Debit Credit Balance
Nov 1 Balance J1 13,950 13,950

Service revenue NO. 407

Date Accounts title Ref Debit Credit Balance
Nov 12 Cash J1 3,100 3,100
27 Accounts receivable J1 2,200 5,300
30 Unearned service revenue J1 1,220 6,520
(adjustment)

Depreciation expense NO. 615

Date Accounts title Ref Debit Credit Balance
Nov 30 Accumulated depreciation J1 200 200
(adjustment)

Supplies expense NO. 631

Date Accounts title Ref Debit Credit Balance
Nov 30 Supplies (adjustment) J1 1,100 1,100

Salaries and wages expense NO. 726

Date Accounts title Ref Debit Credit Balance
Nov 8 cash J1 1,000 1,000
25 cash J1 1,700 2,700
30 Salaries and wages payable J1 350 3,050
(adjustment)

Rent expense NO. 729

Date Accounts title Ref Debit Credit Balance
Nov 22 Cash J1 400 400

d. Prepare a trial balance at November 30.

Hamm Equipment Repair

Trial Balance
As at 30 November 2020
Accounts title Debit Credit
Cash 3,220
Accounts receivable 2,830
Supplies 2,500
Equipment 14,000
Accumulated depreciation-equipment 2,000
Accounts payable 2,600
Unearned service revenue 1,800
Salaries and wages payable 0
Owner’s capital 13,950
 Service revenue 5,300
Salaries and wages expense 2,700
Rent expense 400
Total 25,650 25,650

e. Journalize and post adjusting entries.

Hamm Equipment Repair
Journal adjustment
At November 30, 2020
Accounts title Debit Credit
Supplies expense 1,100
Supplies 1,100

Salaries and wages expense 350

Salaries and wages payable 350

Depreciation expense 200

Accumulated depreciation 200

Unearned service revenue 1,220

Service revenue 1,220

f. Prepare an adjusted trial balance.

Hamm Equipment Repair

Adjustment Trial Balance
As at 30 November 2020
Accounts title Debit Credit
Cash 3,220
Accounts receivable 2,830
Supplies 1,400
Equipment 14,000
Accumulated depreciation-equipment 2,200
Accounts payable 2,600
Unearned service revenue 580
Salaries and wages payable 350
Owner’s capital 13,950
Service revenue 6,520
Salaries and wages expense 3,050
Rent expense 400
Supplies expense 1,100
Depreciation expense 200
Total 26,200 26,200
g. Prepare an income statement and an owner's equity statement for November and a balance sheet
at November 30.

Hamm Equipment Repair

Income statement
For the month ended 30 November 2020
Debit Credit
Revenue
Service revenue 6,520

Expense
Salaries and wages expense 3,050
Rent expense 400
Supplies expense 1,100
Depreciation expense 200
Total expense 4,750

Net profit 1,770

Hamm Equipment Repair

Statement of change in equity
For the month ended 30 November 2020
$ $
Owner’s capital, 1 Nov 2020 13,950
Add: Additional investment 0
Add: net profit 1,770
Owner’s capital, 30 Nov 2020 15,720

Hamm Equipment Repair

Balance sheet
As at 30 November 2020
$ $
Current assets
Cash 3,220
Accounts receivable 2,830
Total current assets 6,050

Non-current assets
Supplies 1,400
Equipment 14,000
Accumulated depreciation-equipment (2,200)
11,800
Total non-current assets 13,200
Total assets 19,250

Current liability
Accounts payable 2,600
Unearned service revenue 580
Salaries and wages payable 350
Total current liability 3,530

Equity
Owner’s capital 15,720
Total liability and equity 19,250