Prepare a statement of owners equity for the year end of May

Prepare a statement of owner\'s equity for the year end of May 31st, and a balance sheet as of may 31st

TAKING IT FURTHER As at June 30, 2017, approximately how old are the equipment and vehicles? P3-11B Mountain Best Lodge has a May 31 fiscal year end and prepares adjusting entries on a monthly basis. The following trial balance was prepared before recording the May 31 month-end adjustments: MOUNTAIN BEST LODGE Trial Balance May 31, 2017 Debit Credit Cash $12,365 Prepaid insurance 3,080 1,050 80,000 180,000 Supplies Land Buildings Accumulated depreciation-buildings Furniture Accumulated depreciation-furniture Accounts payable Unearned revenue Mortgage payable M. Rundle, capital M. Rundle, drawings Rent revenue Advertising expense Depreciation expense Salaries expense Supplies expense Interest expense Insurance expense Utilities expense $ 76,125 21,000 12,250 4,780 8,500 146,400 54,800 18,750 102,100 500 7,975 49,304 5,410 7,381 4,840 13,300 $404,955 $404,955

Solution

MOUNTAIN BEST LODGE

31-05-2017

ADJUSTMENT JOURNAL ENTRIES

1.

Prepaid Insurance A/c Dr. 2640

To Insurance A/c 2640

2.

Supplies W/off A/c Dr 290

To Supplies A/c 290

3.

Unearned Revenue A/c Dr 2000

To Rent Revenue A/c 2000

4.

Accrued Interest on morgage A/c Dr 671

To Morgage A/c 671

5.

Salaries A/c Dr 1025

To Salaries Payable A/c 1025

6.

Utility Expences A/c Dr 1250

To Utility Exps. Payable 1250

7.

Rent Revenue Receibavle A/c Dr 950

To Rent Revenue A/c 950

MOUNTAIN BEST LODGE

31-05-2017

INCOME STATMENT

Rent Revenue (102100+2000+950) 105050

Less; Expences

1. Advertisement Exps. 500

2. Depreciation Exps. 7975

3. Salaries Exps. 49304

4. Supplies Exps. 5410

5. Interest Exps. 7381

6. Insurance Exps. (4840+2640) 7480

7. Utility Exps. 13300

8. Supplies W/offs 290

9. Accrued Interest on morgage 671

10. Salary for May 1025

11. Unaccounted utility exps. for May 1250

Total Expences 94586

Net Income from operation 10464

MOUNTAIN BEST LODGE

31-05-2017

OWNER EQUITY

Mr. Rundle

Opening Balance of Capital 54800

Add: Income from Operation for the period 10464

Less: Drawings 18750

Closing Balance of Capital 46514

MOUNTAIN BEST LODGE

31-05-2017

BALANCE SHEET

ASSETS

Land 80000

Building 180000

Furniture 21000

Supplies 760

Rent Revenue Receibavle 950

Prepaid Insurance 5720

Cash 7085

Total Assets 295515

Liabilities

Rundle\'s Capital 46514

Acc. Dep. on Building 76125

Acc. Dep. on Furniture 12250

Accounts Payable 4780

Unearned Revenue 6500

Morgage Payable 147071

Utility Exps. Payable 1250

Salary Payable 1025

Total Liabilities 295515

So above is the solution for the problem

Notes:

1. All figures stated above is USD ($)

2. Net Revenue = 102100+2000+950 = 105050

3. Insurance Exps. = 4840+2640 = 7480

4. Depreciation is already accounted in trial balance so no adjustment has been made.