MPB Program

(January to June’2026)

Problems for Practice

(Chapter # 1, 2, 3)

Course Code : MPB-403

Course Name : Financial Accounting

Engr. Md. Anisur Rahman

Assistant General Manager
Bangladesh Development Bank PLC.
(MPB 14th Batch, ID # 52514008)
Problem # P1.1
On April 1, Julie Spengel established Spengel’s Travel Agency. The following transactions were completed during the month :
1 Invested $15,000 cash to start the 6 Performed services worth $10,000: $3,000 cash is received from
agency. customers, and the balance of $7,000 is billed to customers on account.
2 Paid $600 cash for April office rent. 7 Withdrew $600 cash for personal use.
3 Purchased equipment for $3,000 cash. 8 Paid Chicago Tribune $500 of the amount due in transaction (4).
4 Incurred $700 of advertising costs in 9 Paid employees’ salaries $2,500.
the Chicago Tribune, on account.
5 Paid $900 cash for office supplies. 10 Received $4,000 in cash from customers who have previously been
billed in transaction (6).
Instructions:
a. Prepare a tabular analysis of the transactions.
b. From an analysis of the owner’s equity columns, compute the net income or net loss for April.
 Solution
a. Tabular Summary of the Transactions
Assets = Liabilities + Owner's Equity
Trans.
Accounts Accounts Owner's Owner's
No. Cash + + Supplies + Equipment = + - + Revenues - Expenses
Receivable Payable Capital Drawings
1 +$15,000 +$15,000
2 -600 -$600
3 -3,000 +$3,000
4 +$700 -700
5 -900 +$900
6 +3,000 +$7,000 +$10,000
7 -600 -$600
8 -500 -500
9 -2,500 -2,500
10 +4,000 -4,000
$13,900 + $3,000 + $900 + $3,000 = $200 + $15,000 - $600 + $10,000 - $3,800
20,800 20,800

(b) Net Income Calculation

Net Income  Revenues – Expenses  $ 10,000  $ 3,800  $ 6,200
 Problem # P1.2
Sonya Jared opened a law office on July 1, 2022. On July 31, the balance sheet showed Cash $5,000, Accounts Receivable $1,500, Supplies $500,
Equipment $6,000, Accounts Payable $4,200, and Owner’s Capital $8,800. During August, the following transactions occurred :
1. Collected $1,200 of accounts receivable. 5. Paid salaries $2,800, rent for August $900, and advertising
expenses $400.
2. Paid $2,800 cash on accounts payable. 6. Withdrew $700 in cash for personal use.
3. Recognized revenue of $7,500 of which $4,000 is 7. Received $2,000 from Standard Federal Bank—money
collected in cash and the balance is due in September. borrowed on a note payable.
4. Purchased additional equipment for $2,000, paying 8. Incurred utility expenses for month on account $270.
$400 in cash and the balance on account.
Instructions:
a. Prepare a tabular analysis of the August transactions beginning with July 31 balances.
b. Prepare an income statement for August, an owner’s equity statement for August, and a balance sheet at August 31.
 Solution
a. Tabular Analysis of Transactions
Assets = Liabilities + Owner's Equity
Trans.
Accounts Accounts Notes Owner's Owner's
No. Cash + + Supplies + Equipment = + + - + Revenues - Expenses
Receivable Payable Payable Capital Drawings
Beginning
$5,000 $1,500 +$500 +$6,000 +$4,200 +$8,800
(July 31)
1 +1,200 -1,200
2 -2,800 -2,800
3 +4,000 +3,500 +$7,500
4 -400 +2,000 +1,600
5 -2,800 -$2,800
-900 -900
-400 -400
6 -700 -$700
7 +2,000 +2,000
8 +270 -270
$4,200 + $3,800 + $500 + $8,000 = $3,270 + $2,000 + $8,800 - $700 + $7,500 - $4,370
$16,500 $16,500
 b. Income Statement, Owner’s Equity Statement and Balance Sheet
Sonya Jared Sonya Jared
Income Statement
Owner's Equity
For the Month Ended August 31, 2022
For the Month Ended August 31, 2022
Particulars Amount in $ Amount in $
Revenues Particulars Amount in $ Amount in $
Service Revenue 7,500 Owner’s Capital, July 1 8,800
Expenses Add: Net Income 3,130 3,130
Salaries and Wages Expense 2,800 11,930
Rent Expense 900
Less: Drawings -700
Advertising Expense 400
Utilities Expense 270 Owner’s Capital, Aug 31 11,230
Total Expenses -4,370
Net Income 3,130

Sonya Jared
Balance Sheet
For the Month Ended August 31, 2022
Particulars Amount in $
Assets
Cash 4,200
Accounts Receivable 3,800
Supplies 500
Equipment 8,000
Total Assets 16,500
Libilities and Owner's Equity
Liabilities
Accounts Payable 3,270
Notes Payable 2,000
Owner's Equity
Owner's Capital, Aug 31 11,230
Total Liabilities and Owner's Equity 16,500
Problem # P2.1
Holz Disc Golf Course was opened on March 1 by Ian Holz. The following selected events and
transactions occurred during March.
Mar. 1 Invested $20,000 cash in the business.
3 Purchased Rainbow Golf Land for $15,000 cash. The price consists of land
$12,000, shed $2,000, and equipment $1,000. (Make one compound entry.)
5 Paid advertising expenses of $900.
6 Paid cash $600 for a one-year insurance policy.
10 Purchased golf discs and other equipment for $1,050 from Stevenson Company
payable in 30 days.
18 Received $1,100 in cash for golf fees (Holz records golf fees as service revenue).
19 Sold 150 coupon books for $10 each. Each book contains 4 coupons that enable
the holder to play one round of disc golf.
25 Withdrew $800 cash for personal use.
30 Paid salaries of $250.
30 Paid Stevenson Company in full.
31 Received $2,700 cash for golf fees.
Holz Disc Golf uses the following accounts: Cash, Prepaid Insurance, Land, Buildings, Equipment,
Accounts Payable, Unearned Service Revenue, Owner's Capital, Owner's Drawings, Service Revenue,
Advertising Expense, and Salaries and Wages Expense.
Instructions : Journalize the March transactions.
 Journal Entries
GENERAL JOURNAL J1
Date Account Titles and Explanation Ref. Debit Credit
Mar 1 Cash 20,000
Owner’s Capital 20,000
(Owner’s investment of cash in business)
Mar 3 Land 12,000
Buildings 2,000
Equipment 1,000
Cash 15,000
(Purchased Rainbow Golf Land for cash)
Mar 5 Advertising Expense 900
Cash 900
(Paid advertising expenses)
Mar 6 Prepaid Insurance 600
Cash 600
(Paid one-year insurance policy)
Mar 10 Equipment 1,050
Accounts Payable 1,050
(Purchased equipment on account)
Mar 18 Cash 1,100
Service Revenue 1,100
(Received cash for golf fees)
Mar 19 Cash (150 x $10) 1,500
Unearned Service Revenue 1,500
(Sold 150 coupon books for $10 each)
Mar 25 Owner's Drawings 800
Cash 800
(Withdrew cash for personal use)
 GENERAL JOURNAL J1
Date Account Titles and Explanation Ref. Debit Credit
Mar 30 Salaries and Wages Expense 250
Cash 250
(Paid salaries)
Mar 30 Accounts Payable 1,050
Cash 1,050
(Paid Stevenson Company in full : March 10)
Mar 31 Cash 2,700
Service Revenue 2,700
(Received cash for golf fees)

Problem # P2.2
Vera Ernst is a licensed dentist. During the first month of the operation of her business, the following
events and transactions occurred.
April 1 Invested $20,000 cash in her business.
1 Hired a secretary-receptionist at a salary of $700 per week payable monthly.
2 Paid office rent for the month $1,500.
3 Purchased dental supplies on account from Dazzle Company $4,000.
10 Performed dental services and billed insurance companies $5,100.
11 Received $1,000 cash advance from Leah Mataruka for an implant.
20 Received $2,100 cash for services performed from Michael Santos.
30 Paid secretary-receptionist for the month $2,800.
30 Paid $2,600 to Dazzle for accounts payable due.
Vera uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126
Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 301 Owner's Capital, No.
400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.
Instructions :
a. Journalize the transactions.
b. Post to the ledger accounts.
c. Prepare a trial balance on April 30, 2022.
a. Journal Entries
GENERAL JOURNAL J1
Date Account Titles and Explanation Ref. Debit Credit
Apr 1 Cash 20,000
Owner’s Capital 20,000
(Owner’s investment of cash in business)
Apr 1 No entry – hiring of employee is not a transaction - -
Apr 2 Rent Expense 1,500
Cash 1,500
(Paid office rent for April)
Apr 3 Supplies 4,000
Accounts Payable 4,000
(Purchased supplies from Dazzle Co. on account)
Apr 10 Accounts Receivable 5,100
Service Revenue 5,100
(Billed insurance companies for services)
Apr 11 Cash 1,000
Unearned Service Revenue 1,000
(Received cash advance for implant)
 GENERAL JOURNAL J1
Date Account Titles and Explanation Ref. Debit Credit
Apr 20 Cash 2,100
Service Revenue 2,100
(Received cash for services performed)
Apr 30 Salaries and Wages Expense 2,800
Cash 2,800
(Paid secretary-receptionist for April)
Apr 30 Accounts Payable 2,600
Cash 2,600
(Paid Dazzle Company on account)

b. Ledger Accounts
Cash Service Revenue
Debit Credit Debit Credit
Apr 1 20,000 Apr 2 1,500 Apr 10 5,100
Apr 11 1,000 Apr 30 2,800 Apr 20 2,100
Apr 20 2,100 Apr 30 2,600 Balance : 7,200
23,100 6,900
Balance : 16,200
Accounts Receivable Unearned Service Revenue
Debit Credit Debit Credit
Apr 10 5,100 Apr 11 1,000
Balance : 5,100 Balance : 1,000
Supplies Rent Expense
Debit Credit Debit Credit
Apr 3 4,000 Apr 2 1,500
Balance : 4,000 Balance : 1,500
Accounts Payable Salaries and Wages Expense
Debit Credit Debit Credit
Apr 30 2,600 Apr 3 4,000 Apr 30 2,800
Balance : 1,400 Balance : 2,800
Owner's Capital
Debit Credit
Apr 1 20,000
Balance : 20,000

c. Trial Balance
Vera Ernst
Trial Balance
April 30,2022
Account Title Debit ($) Credit ($)
Cash 16,200
Accounts Receivable 5,100
Supplies 4,000
Accounts Payable 1,400
Owner's Capital 20,000
Service Revenue 7,200
Unearned Service Revenue 1,000
Rent Expense 1,500
Salaries and Wages Expense 2,800
29,600 29,600
Problem # P2.3
Maquoketa Services was formed on May 1, 2022. The following transactions took place
during the fi rst month.
Transactions on May 1:
1. Jay Bradford invested $40,000 cash in the company, as its sole owner.
2. Hired two employees to work in the warehouse. They will each be paid a salary of
$3,050 per month.
3. Signed a 2-year rental agreement on a warehouse, paid $24,000 cash in advance for
the first year.
4. Purchased furniture and equipment costing $30,000. A cash payment of $10,000
was made immediately; the remainder will be paid in 6 weeks.
5. Paid $1,800 cash for a one-year insurance policy on the furniture and equipment.
Transactions during the remainder of the month:
6. Purchased basic office supplies for $420 cash.
7. Purchased more office supplies for $1,500 on account.
8. Total revenue earned were $20,000—$8,000 cash and $12,000 on account.
9. Paid $400 to suppliers for accounts payable due.
10. Received $3,000 from customers in payment of accounts receivable.
11. Received utility bills in the amount of $380, to be paid next month.
12. Paid monthly salaries of the two employees, totaling $6,100.
Instructions: a. Prepare journal entries to record each of the events listed. b. Post the
journal entries to T-accounts, c. Prepare a trial balance as of May 31, 2022.
a. Journal Entries
GENERAL JOURNAL J1
Date Account Titles and Explanation Ref. Debit Credit
2022
May 1 Cash 40,000
Owner’s Capital 40,000
(Owner’s investment of cash in business)
May 1 No journal entry — salaries will be recorded when paid. - -
May 1 Prepaid Rent 24,000
Cash 24,000
(Paid one year rent in advance)
May 1 Furniture and Equipment 30,000
Cash 10,000
Accounts Payable 20,000
(Purchased equipment; paid part cash)
May 1 Prepaid Insurance 1,800
Cash 1,800
(Paid one-year insurance policy)
May 6 Supplies 420
Cash 420
(Purchased office supplies for cash)
May 7 Supplies 1,500
Accounts Payable 1,500
(Purchased office supplies on account)
May 8 Cash 8,000
Accounts Receivable 12,000
Service Revenue 20,000
(Earned revenue; part cash, part on account)
 GENERAL JOURNAL J1
Date Account Titles and Explanation Ref. Debit Credit
May 9 Accounts Payable 400
Cash 400
(Paid suppliers on account)
May 10 Cash 3,000
Accounts Receivable 3,000
(Received cash from customers on account)
May 11 Utilities Expense 380
Accounts Payable 380
(Received utility bill; to be paid later)
May 12 Salaries Expense 6,100
Cash 6,100
(Paid monthly salaries)

(b). Posting to T-Accounts

Cash Accounts Payable
Debit Credit Debit Credit
May 1 40,000 May 1 24,000 May 9 400 May 1 20,000
May 8 8,000 May 1 10,000 May 7 1,500
May 10 3,000 May 1 1,800 May 11 380
51,000 May 6 420 21,880
May 9 400 Balance : 21,480
May 12 6,100
42,720
Balance : 8,280

Accounts Receivable Owner’s Capital

Debit Credit Debit Credit
May 8 12,000 May 10 3,000 May 1 40,000
Balance : 9,000
Supplies Service Revenue
Debit Credit Debit Credit
May 6 420 May 8 20,000
May 7 1,500
Balance : 1,920

Prepaid Rent Utilities Expense

Debit Credit Debit Credit
May 1 24,000 May 11 380

Prepaid Insurance Salaries Expense

Debit Credit Debit Credit
May 1 1,800 May 12 6,100

Furniture and Equipment

Debit Credit
May 1 30,000
(c). Trial Balance
Maquoketa Services
Trial Balance
May 31, 2022
Account Title Debit ($) Credit ($)
Cash 8,280
Accounts Receivable 9,000
Supplies 1,920
Prepaid Rent 24,000
Prepaid Insurance 1,800
Furniture and Equipment 30,000
Accounts Payable 21,480
Owner’s Capital 40,000
Service Revenue 20,000
Salaries Expense 6,100
Utilities Expense 380
81,480 81,480

Problem # P2.5
The Starr Theater, owned by Meg Vargo, will begin operations in March. The Starr will be unique in
that it will show only triple features of sequential theme movies. As of March 1, the ledger of Starr
showed No. 101 Cash $3,000; No. 140 Land $24,000; No. 145 Buildings (concession stand,
projection room, ticket booth, and screen) $10,000; No. 157 Equipment $10,000; No. 201 Accounts
Payable $7,000; and No. 301 Owner's Capital $40,000. During the month of March, the following
events and transactions occurred.
Mar. 2 Rented the three Indiana Jones movies to be shown for the first 3 weeks of
March. The film rental was $3,500; $1,500 was paid in cash and $2,000 will be
paid on March 10.
3 Ordered the Lord of the Rings movies to be shown the last 10 days of March. It
will cost $200 per night.
9 Received $4,300 cash from admissions.
10 Paid balance due on Indiana Jones movies rental and $2,100 on March 1 accounts
payable.
11 Starr Theater contracted with Adam Ladd to operate the concession stand. Ladd
is to pay 15% of gross concession receipts, payable monthly, for the rental of the
concession stand.
12 Paid advertising expenses $900.
20 Received $5,000 cash from customers for admissions.
20 Received the Lord of the Rings movies and paid the rental fee of $2,000.
31 Paid salaries of $3,100.
31 Received statement from Adam Ladd showing gross receipts from concessions of
$6,000 and the balance due to Starr Theater of $900 ($6,000 × 15%) for March.
Ladd paid one-half the balance due and will remit the remainder on April 5.
31 Received $9,000 cash from customers for admissions.
In addition to the accounts identified above, the chart of accounts includes No. 112 Accounts
Receivable, No. 400 Service Revenue, No. 429 Rent Revenue, No. 610 Advertising Expense, No. 726
Salaries and Wages Expense, and No. 729 Rent Expense.
Instructions :
a. Enter the beginning balances in the ledger. Insert a check mark (✓) in the reference column of
the ledger for the beginning balance.
b. Journalize the March transactions. Starr records admission revenue as service revenue, rental of
the concession stand as rent revenue, and film rental expense as rent expense.
c. Post the March journal entries to the ledger. Assume that all entries are posted from page 1 of
the journal.
d. Prepare a trial balance on March 31, 2022.
a. Beginning Balances in Ledger (with ✓)
The Starr Theater
Beginning Balances in the Ledger
March 1,2022
Account Title Debit ($) Credit ($) Ref
Cash 3,000 ✓
Land 24,000 ✓
Buildings 10,000 ✓
Equipment 10,000 ✓
Accounts Payable 7,000 ✓
Owner's Capital 40,000 ✓
b. Journal Entries
GENERAL JOURNAL J1
Date Account Titles and Explanation Ref. Debit Credit
2022
Mar. 2 Rent Expense 3,500
Cash 1,500
Accounts Payable 2,000
(Rental of Indiana Jones movies; paid $1,500
cash, balance on account)
Mar. 3 No entry (only ordered, not received) - -
Mar. 9 Cash 4,300
Service Revenue 4,300
(Admission revenue)
Mar. 10 Accounts Payable (2,000+2,100) 4,100
Cash 4,100
(Payment of film rental balance and March 1
accounts payable)
Mar. 11 No entry (contract only) - -
Mar. 12 Advertising Expense 900
Cash 900
(Advertising expense)
Mar. 20 Cash 5,000
Service Revenue 5,000
(Admission revenue)
Mar. 20 Rent Expense 2,000
Cash 2,000
(Rental of Lord of the Rings movies)
Mar. 31 Salaries and Wages Expense 3,100
Cash 3,100
(Salaries paid)
Mar. 31 Cash 450
Accounts Receivable 450
Rent Revenue 900
(Concession stand rental revenue; half
received, half due)
 GENERAL JOURNAL J1
Date Account Titles and Explanation Ref. Debit Credit
Mar. 31 Cash 9,000
Service Revenue 9,000
(Admission revenue)
c. Posting to Ledger (all entries from page J1)

Cash
Date Explanation Ref. Debit Credit Balance
Mar 1 Beginning Balance  3,000
Mar 2 J1 1,500 1,500
Mar 9 J1 4,300 5,800
Mar 10 J1 4,100 1,700
Mar 12 J1 900 800
Mar 20 J1 5,000 5,800
Mar 20 J1 2,000 3,800
Mar 31 J1 3,100 700
Mar 31 J1 450 1,150
Mar 31 J1 9,000 10,150

Accounts Receivable
Date Explanation Ref. Debit Credit Balance
Mar 31 J1 450 450

Land
Date Explanation Ref. Debit Credit Balance
Mar 1 Beginning Balance  24,000

Buildings
Date Explanation Ref. Debit Credit Balance
Mar 1 Beginning Balance  10,000

Equipment
Date Explanation Ref. Debit Credit Balance
Mar 1 Beginning Balance  10,000

Accounts Payable
Date Explanation Ref. Debit Credit Balance
Mar 1 Beginning Balance  7,000
Mar 2 J1 2,000 9,000
Mar 10 J1 4,100 4,900

Owner's Capital
Date Explanation Ref. Debit Credit Balance
Mar 1 Beginning Balance  40,000

Service Revenue
Date Explanation Ref. Debit Credit Balance
Mar 9 J1 4,300 4,300
Mar 20 J1 5,000 9,300
Mar 31 J1 9,000 18,300
 Rent Revenue
Date Explanation Ref. Debit Credit Balance
Mar 31 J1 900 900

Advertising Expense
Date Explanation Ref. Debit Credit Balance
Mar 12 J1 900 900

Salaries and Wages Expense

Date Explanation Ref. Debit Credit Balance
Mar 31 J1 3,100 3,100

Rent Expense
Date Explanation Ref. Debit Credit Balance
Mar 2 J1 3,500 3,500
Mar 20 J1 2,000 5,500

d. Trial Balance
The Starr Theater
Trial Balance
March 31, 2022
Account Title Debit ($) Credit ($)
Cash 10,150
Accounts Receivable 450
Land 24,000
Buildings 10,000
Equipment 10,000
Accounts Payable 4,900
Owner's Capital 40,000
Service Revenue 18,300
Rent Revenue 900
Advertising Expense 900
Salaries and Wages Expense 3,100
Rent Expense 5,500
64,100 64,100
Problem # P3.1

(a). Adjusting Entries

For the month of May 31, 2022
Date Account Titles and Explanation Ref. Debit Credit
2022 Supplies Expense J4 900
May, 31 Supplies 900
(To record supplies used)
Utilities Expense J4 250
Utilities Payable 250
(To record accrued utilities)
Insurance Expense [$3,600 ÷ 24] J4 150
Prepaid Insurance 150
(To record insurance expired)
Date Account Titles and Explanation Ref. Debit Credit
Unearned Service Revenue [$2,000-$400] J4 1,600
Service Revenue 1,600
(To record revenue earned)
Salaries & Wages Expense [($920÷ 5)x3x2] J4 1,104
Salaries & Wages Payable 1,104
(To record Accrued salaries and wages)
Depreciation Expense J4 190
Accumulated Depreciation—Equipment 190
(To record monthly depreciation)
Accounts Receivable J4 1,700
Service Revenue 1,700
(To record unbilled services)

(b) Posting to Ledger (Adjusted Balances)

Krause Consulting
(General Ledger-Adjusted)
No. 101 Cash No. 209 Unearned Service Revenue
Date Ref. Debit Credit Balance Date Ref. Debit Credit Balance
May 31 4,500 4,500 May 31 2,000 2,000
Adj 1,600 400

No. 112 Accounts Receivable No. 301 Owner’s apital

Date Ref. Debit Credit Balance Date Ref. Debit Credit Balance
6,000 6,000 May 31 18,700 18,700
May 31
Adj 1,700 7,700

No. 126 Supplies No. 400 Service Revenue

Date Ref. Debit Credit Balance Date Ref. Debit Credit Balance
May 31 1,900 1,900 May 31 9,500 9,500
May 31 Adj 900 1,000 Adj 1,600 11,100
Adj 1,700 12,800
No. 130 Prepaid Insurance No. 722 Insurance Expense
Date Ref. Debit Credit Balance Date Ref. Debit Credit Balance
May 31 3,600 3,600 May 31 Adj 150 150
Adj 150 3,450
No. 149 Equipment No. 726 Salaries and Wages Expense
Date Ref. Debit Credit Balance Date Ref. Debit Credit Balance
May 31 11,400 11,400 May 31 6,400 6,400
Adj 1,104 7,504

Accumulated Depreciation—
No. 150 No. 729 Rent Expense
Equipment
Date Ref. Debit Credit Balance Date Ref. Debit Credit Balance
May 31 Adj 190 190 May 31 900 900

No. 201 Accounts Payable No. 732 Utilities Expense

Date Ref. Debit Credit Balance Date Ref. Debit Credit Balance
May 31 4,500 4,500 May 31 Adj 250 250
No. 201 Utilities Payable No. 631 Supplies Expense
Date Ref. Debit Credit Balance Date Ref. Debit Credit Balance
May 31 Adj 250 250 May 31 Adj 900 900
 No. 212 Salaries and Wages Payable No. 717 Depreciation Expense
Date Ref. Debit Credit Balance Date Ref. Debit Credit Balance
May 31 Adj 1,104 1,104 May 31 Adj 190 190

(c) Adjusted Trial Balance

Krause Consulting
Adjusted Trial Balance
May 31, 2022
Account Account Title Debit ($) Credit ($)
101 Cash 4,500
112 Accounts Receivable 7,700
126 Supplies 1,000
130 Prepaid Insurance 3,450
149 Equipment 11,400
150 Accumulated Depreciation—Equipment 190
201 Accounts Payable 4,500
201 Utilities Payable 250
212 Salaries and Wages Payable 1,104
209 Unearned Service Revenue 400
301 Owner’s Capital 18,700
400 Service Revenue 12,800
722 Insurance Expense 150
726 Salaries and Wages Expense 7,504
729 Rent Expense 900
732 Utilities Expense 250
631 Supplies Expense 900
717 Depreciation Expense 190
37,944 37,944

Problem # P 3.2
 (a). Adjusting Entries
For the month of May 31, 2022
Date Account Titles and Explanation Ref. Debit Credit
2020 Insurance Expense [$2,400 ÷ 12] 200
May, Prepaid Insurance 200
31 (To record insurance expired)
Supplies Expense [$2,080 − $750] 1,330
Supplies 1,330
(To record supplies used)
Depreciation Expense-Buildings [$3,600 ÷ 12] 300
Accumulated Depreciation-Buildings 300
(To record monthly depreciation of buildings)
Depreciation Expense-Equipment [$1,500 ÷ 12] 125
Accumulated Depreciation-Equipment 125
(To record monthly depreciation of equipment)
Interest Expense [$40,000 × 6% × 1/12] 200
Interest Payable 200
(To record monthly interest)
Unearned Rent Revenue [$3,300 × 2/3] 2,200
Rent Revenue 2,200
(To record rent revenue earned)
Salaries & Wages Expense 750
Salaries & Wages Payable 750
(To record Accrued salaries and wages)
 (b) Posting to Ledger (Adjusted Balances)
Hank’s Hotel
(General Ledger-Adjusted)
101 Cash
Date Explanation Ref. Debit Credit Balance
May 31 Balance 3,400

126 Supplies
Date Explanation Ref. Debit Credit Balance
May 31 Balance 2,080
May 31 Adj. (Supplies Expense) J1 1,330 750

130 Prepaid Insurance

Date Explanation Ref. Debit Credit Balance
May 31 Balance 2,400
May 31 Adj. (Insurance Expense) J1 200 2,200

140 Land
Date Explanation Ref. Debit Credit Balance
May 31 Balance 12,000

141 Buildings
Date Explanation Ref. Debit Credit Balance
May 31 Balance 60,000

149 Equipment
Date Explanation Ref. Debit Credit Balance
May 31 Balance 15,000

142 Accumulated Depreciation—Buildings

Date Explanation Ref. Debit Credit Balance
May 31 Adj J1 300 300

150 Accumulated Depreciation—Equipment

Date Explanation Ref. Debit Credit Balance
May 31 Adj J1 125 125

201 Accounts Payable

Date Explanation Ref. Debit Credit Balance
May 31 Balance 4,700

230 Interest Payable

Date Explanation Ref. Debit Credit Balance
May 31 Adj J1 200 200

212 Salaries and Wages Payable

Date Explanation Ref. Debit Credit Balance
May 31 Adj J1 750 750
208 Unearned Rent Revenue
Date Explanation Ref. Debit Credit Balance
May 31 Balance 3,300
May 31 Adj J1 2,200 1,100

275 Mortgage Payable

Date Explanation Ref. Debit Credit Balance
May 31 Balance 40,000

301 Owner's Capital

Date Explanation Ref. Debit Credit Balance
May 31 Balance 41,380

429 Rent Revenue

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

610 Advertising Expense

Date Explanation Ref. Debit Credit Balance
May 31 Balance 600

726 Salaries and Wages Expense

Date Explanation Ref. Debit Credit Balance
May 31 Balance 3,300
May 31 Adj J1 750 4,050

732 Utilities Expense

Date Explanation Ref. Debit Credit Balance
May 31 Balance 900

722 Insurance Expense

Date Explanation Ref. Debit Credit Balance
May 31 Adj J1 200 200

631 Supplies Expense

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

619 Depreciation Expense—Buildings

Date Explanation Ref. Debit Credit Balance
May 31 Adj J1 300 300

619 Depreciation Expense-Equipment

Date Explanation Ref. Debit Credit Balance
May 31 Adj J1 125 125

718 Interest Expense

Date Explanation Ref. Debit Credit Balance
May 31 Adj J1 200 200
 c. Adjusted Trial Balance
Hank’s Hotel
Adjusted Trial Balance
May 31, 2020
Account Account Title Debit ($) Credit ($)
101 Cash 3,400
126 Supplies 750
130 Prepaid Insurance 2,200
140 Land 12,000
141 Buildings 60,000
149 Equipment 15,000
142 Accumulated Depreciation—Buildings 300
150 Accumulated Depreciation—Equipment 125
201 Accounts Payable 4,700
230 Interest Payable 200
212 Salaries and Wages Payable 750
208 Unearned Rent Revenue 1,100
275 Mortgage Payable 40,000
301 Owner's Capital 41,380
429 Rent Revenue 12,500
610 Advertising Expense 600
726 Salaries and Wages Expense 4,050
732 Utilities Expense 900
722 Insurance Expense 200
631 Supplies Expense 1,330
619 Depreciation Expense—Buildings 300
619 Depreciation Expense-Equipment 125
718 Interest Expense 200
101,055 101,055

d. Income Statement, Owner’s Equity Statement and Balance Sheet

Hank’s Hotel
Income Statement
For the Month Ended May 31, 2020
Particulars Amount in $ Amount in $
Revenues
Rent Revenue 12,500
Total Revenues 12,500
Expenses
Advertising Expense 600
Salaries and Wages Expense 4,050
Utilities Expense 900
Insurance Expense 200
Supplies Expense 1,330
Depreciation Expense—Buildings 300
Depreciation Expense-Equipment 125
Interest Expense 200
Total Expenses 7,705
Net Income 4,795
 Hank’s Hotel
Owner's Equity
For the Month Ended May 31, 2020
Particulars Amount in $
Owner’s Capital (beginning) 41,380
Add: Net Income 4,795
Less: Drawings 0
Owner’s Capital 46,175

Hank’s Hotel
Balance Sheet
May 31,2020
Particulars Amount in $
ASSETS
Current Assets
Cash 3,400
Supplies 750
Prepaid Insurance 2,200
Total Current Assets 6,350
Property, Plant and Equipment
Land 12,000
Buildings 60,000
Less : Accumulated Depreciation-Buildings Equipment -300
Equipment 15,000
Less : Accumulated Depreciation-Equipment -125
Total Property, Plant and Equipment 86,575
Total Assets 92,925
Liabilities and Owner’s Equity
Current Liabilities
Accounts Payable 4,700
Interest Payable 200
Salaries and Wages Payable 750
Unearned Rent Revenue 1,100
Mortgage Payable 40,000
Total Current Liabilities 46,750
Owner’s Equity
Owner's Capital 46,175
Total Liabilities and Owner’s Equity 92,925
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