Question

The Sunland Company opened for business on May 1, 2019. Its trial balance before adjustment on May 31 is as follows. Sunland Company Trial Balance May 31, 2019 Account Number Cash Supplies Prepaid Insurance Land Buildings Equipment Accounts Payable Unearned Rent Revenue Mortgage Payable Common Stock Rent Revenue Advertising Expense Salaries and Wages Expense Debit Credit $3,400 2,000 3.000 14,000 58.800 15,000 $ 11,400 3.400 40,000 35,900 10,400 650 3.400 850 $101,100 $101,100 Utilities Expense In addition to those accounts listed on the trial balance, the chart of accounts for Sunland Company also contains the following accounts and account numbers: No. 142 Accumulated Depreciation-Buildings, No. 150 Accumulated Depreciation-Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 619 Depreciation Expense, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense. Other data: 1. Prepaid insurance is a 1-year policy starting May 1, 2019. 2. A count of supplies shows $800 of unused supplies on May 31. 3. Annual depreciation is $2.940 on the buildings and $1,500 on equipment. 4. The mortgage interest rate is 12%. (The mortgage was taken out on May 1.) 5. Two-thirds of the unearned rent revenue has been earned. 6. Salaries of $700 are accrued and unpaid at May 31.

Answer 1

Sunland Company Journal entries No. Date Account 1 31-May Insurance Expense Prepaid Insurance Credit Debit $ Calculation =3,000/12 250 $ 250 2 $ 1,200 =2,000-800 31-May Supplies Expense Supplies $ 1,200 $ 370 3 31-May Depreciation Expense Accumulated Depreciation-Buildings Accumulated Depreciation Equipment $ $ 245 125 -2,940/12 =1,500/12 $ 400 -40,000*12%*1/12 4 31-May Interest Expense Interest Payable $ 400 $ 2,267 =3,400*2/3 5 31-May Unearned Rent Revenue Rent Revenue $ 2,267 $ 700 6 31-May Salaries and Wages Expense Salaries and Wages Payable $ 700

Sunland Company T Accounts Date Item Credit Post Ref Debit Cash 31-May Balance Prepaid Insurance 31-May Balance 31-May Adjusting J1 $ 250 Buildings 31-May Balance Equipment 31-May Balance Accounts Payable 31-May Balance Salaries and Wages Payable 31-May Balance 31-May Adjusting Balance Date Item Post Ref Debit Credit Balance Supplies $ 3,400 31-May Balance v $ 2,000 $ 3,400 31-May Adjusting J1 $ 1,200 $ 800 Land $ 3,000 31-May Balance $ 14,000 $ 2,750 $ 14,000 Accumulated Depreciation-Buildings $ 58,800 31-May Balance ✓ $ - $ 58,800 31-May Adjusting J1 $ 245 $ 245 Accumulated Depreciation-Equipment $ 15,000 31-May Balance v $ 15,000 31-May Adjusting J1 $ 125 $ 125 Unearned Rent Revenue $ 11,400 31-May Balance ✓ $ 3,400 $ 11,400 31-May Adjusting J1 $ 2,267 $ 1,133 Interest Payable $ - 31-May Balance ✓ $ . $ 700 31-May Adjusting J1 $ 400 $ 400 Common Stock $ 40,000 31-May Balance $ 35,900 $ 40,000 $ 35,900 Advertising Expense $ 10,400 31-May Balance $ 650 $ 12,667 $ 650 Supplies Expense $ - 31-May Balance ✓ $ - $ 370 31-May Adjusting J1 $ 1,200 $ 1,200 Insurance Expense $ - 31-May Balance v $ - $ 400 31-May Adjusting J1 $ 250 $ 250 Utilities Expense $ 3,400 31-May Balance $ 850 $ 4,100 $ 850 $ 700 Mortgage Payable 31-May Balance Rent Revenue 31-May Balance 31-May Adjusting $ 2,267 Depreciation Expense 31-May Balance 31-May Adjusting 370 $ Interest Expense 31-May Balance 31-May Adjusting J1 $ 400 Salaries and Wages Expense 31-May Balance 31-May Adjusting J1 $ 700

Sunland Company Account Names Cash Supplies Prepaid Insurance Land Buildings Accumulated Depreciation-Buildings Equipment Accumulated Depreciation-Equipment Accounts Payable Unearned Rent Revenue Salaries and Wages Payable Interest Payable Mortgage Payable Common Stock Rent Revenue Advertising Expense Depreciation Expense Supplies Expense Interest Expense Insurance Expense Salaries and Wages Expense Utilities Expense Totals Adjusted TB Debit Credit 3,400 800 2,750 14,000 58,800 245 15,000 125 11,400 1,133 700 400 40,000 35,900 12,667 650 370 1,200 400 250 4,100 850 102,570 102,570

12,667 Sunland Company Income Statement For the Month ended May 31, 2019 Revenues Rent Revenue Expenses Advertising Expense Depreciation Expense Supplies Expense Interest Expense Insurance Expense Salaries and Wages Expense Utilities Expense Total Expenses Net Income 650 370 1,200 400 250 4,100 850 7,820 4,847 Statement of Retained Earnings For the Month ended May 31, 2019 Retained Earnings, May 1, 2019 Add: Net Income Retained Earnings, May 31, 2019 4,847 4,847

Sunland Company Balance Sheet As of May 31, 2019 Assets Current Assets Cash Supplies Prepaid Insurance 3,400 800 2,750 Fixed Assets Land Buildings Accumulated Depreciation-Buildings Equipment Accumulated Depreciation-Equipment Total Assets 14,000 58,800 (245) 58,555 15,000 (125) 14,875 94,380 11,400 1,133 Liabilities & Stockholders Equity Current Liabilities Accounts Payable Unearned Rent Revenue Salaries and Wages Payable Interest Payable Mortgage Payable Total Liabilities 700 400 40,000 53,633 Stockholders Equity Common Stock Retained Earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 35,900 4,847 40,747 94,380