Mountain Best Lodge has a May 31 fiscal year end and prepares adjusting entries on a monthly

Question:

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 monthly adjustments:


Additional information:
1. The company pays $5,280 for its annual insurance policy on November 30 of each year.
2. A count of supplies on May 31 shows $760 of supplies on hand.
3. The building was purchased on June 1, 2004, and has an estimated useful life of 40 years.
4. The furniture was purchased on June 1, 2021, and has an estimated useful life of five years.
5. Customers must pay a $50 deposit if they want to book a room in advance during peak times. An analysis of these bookings indicates that 170 deposits were received (all credited to Unearned Revenue) and 40 of the bookings have been provided by May 31, 2024.
6. The mortgage interest rate is 5.5% per year. Interest has been paid to May 1, 2024. The next payment is due on June 1.
7. Salaries accrued to the end of May were $1,025.
8. The May utility bill of $1,250 is unrecorded and unpaid.
9. On May 31, Mountain Best Lodge determined it is owed $950 from customers who are currently using the rooms but will not pay the amount owing until they check out in June. This amount is in addition to any deposits referred to in item 5 above.


Instructions
a. Prepare T accounts and enter the unadjusted trial balance amounts.
b. Prepare and post the monthly adjusting entries on May 31.
c. Prepare an adjusted trial balance at May 31.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Accounting Principles Volume 1

ISBN: 9781119786818

9th Canadian Edition

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

Question Posted: