1CHAPTE
P3-1A Tony Masasi started his own consulting firm, McGee Company, on June 1, 2022.
The trial balance at June 30 is shown below.
McGEE COMPANY
Trial Balance
June 30, 2022
Account Number Debit Credit
101 Cash $ 7,150
112 Accounts Receivable 6,000
126 Supplies 2,000
130 Prepaid Insurance 3,000
157 Equipment 15,000
201 Accounts Payable $ 4,500
209 Unearned Service Revenue 4,000
301 Owner’s Capital 21,750
400 Service Revenue 7,900
726 Salaries and Wages Expense 4,000
729 Rent Expense 1,000
$38,150 $38,150
Other data:
1. Supplies on hand at June 30 are $750.
2. A utility bill for $150 has not been recorded and will not be paid until next
month.
3. The insurance policy is for a year.
4. $2,800 of unearned service revenue has been earned at the end of the month.
5. Salaries of $1,900 are accrued at June 30.
6. The equipment has a 5-year life with no salvage value. It is being depreciated at
$250 per month for 60 months.
7. Invoices representing $1,200 of services performed during the month have not been
recorded as of June 30.
Instructions
(a) Journalize the adjusting entries on June 30.
(b) Prepare an adjusted trial balance on June 30.
(c) Prepare an income statement and an owner’s equity statement for the month of May and a balance
sheet at June 30.
P3-2A Melton River Resort opened for business on June 1 with eight air- conditioned
units. Its trial balance before adjustment on August 31 is as follows.
MELTON RIVER RESORT
Trial Balance August
31, 2022
Account Number Debit Credit
101 Cash $19,600
126 Supplies 3,300
130 Prepaid Insurance 6,000
140 Land 25,000
143 Buildings 125,000
149 Equipment 26,000
201 Accounts Payable $ 6,500
208 Unearned Rent Revenue 7,400
275 Mortgage Payable 80,000
301 Owner’s Capital 100,000
306 Owner’s Drawings 5,000
429 Rent Revenue 80,000
622 Maintenance and Repairs Expense 3,600
726 Salaries and Wages Expense 51,000
732 Utilities Expense 9,400
$273,900 $273,900
Other data:
1. Insurance expires at the rate of $300 per month.
2. A count on August 31 shows $800 of supplies on hand.
3. Annual depreciation is $6,000 on buildings and $2,400 on equipment.
4. Unearned rent revenue of $4,800 was earned prior to August 31.
5. Salaries of $400 were unpaid at August 31.
6. Rentals of $4,000 were due from tenants at August 31. (Use Accounts Receivable.)
7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)
Instructions
(a) Journalize the adjusting entries on August 31 for the 3-month period June 1– August 31.
(b) Prepare an adjusted trial balance on August 31.
(c) Prepare an income statement and an owner’s equity statement for the 3 months ending August
31 and a balance sheet as of August 31.
P3-2B The Bear Motel opened for business on May 1, 2022. Its trial balance before adjustment on May
31 is as follows.
BEAR MOTEL
Trial Balance May
31, 2022
Account Number Debit Credit
101 Cash $ 3,500
126 Supplies 2,080
130 Prepaid Insurance 2,400
140 Land 12,000
141 Buildings 60,000
149 Equipment 15,000
201 Accounts Payable $ 4,800
208 Unearned Rent Revenue 3,300
275 Mortgage Payable 40,000
301 Owner’s Capital 41,380
429 Rent Revenue 10,300
610 Advertising Expense 600
726 Salaries and Wages Expense 3,300
732 Utilities Expense 900
$99,780 $99,780
Other data:
2. Prepaid insurance is a 1-year policy starting May 1, 2012.
3. A count of supplies shows $750 of unused supplies on May 31.
4. Annual depreciation is $3,000 on the buildings and $1,500 on equipment.
5. The mortgage interest rate is 12%. (The mortgage was taken out on May 1.)
6. Two-thirds of the unearned rent revenue has been earned.
7. Salaries of $750 are accrued and unpaid at May 31.
Instructions
(a) Journalize the adjusting entries on May 31.
(b) Prepare an adjusted trial balance on May 31.
(c) Prepare an income statement and an owner’s equity statement for the month of May and a balance
sheet at May 31.