Question

The Skysong, Inc. opened for business on May 1, 2020. Its trial balance before adjustment on...

The Skysong, Inc. opened for business on May 1, 2020. Its trial balance before adjustment on May 31 is as follows.

Account Number Debit Credit
101 Cash $ 3,400
126 Supplies 2,050
130 Prepaid Insurance 3,000
140 Land 14,000
141 Buildings 59,400
149 Equipment 14,900
201 Accounts Payable $ 11,900
208 Unearned Rent Revenue 3,100
275 Mortgage Payable 40,000
311 Common Stock 35,800
429 Rent Revenue 10,750
610 Advertising Expense 650
726 Salaries and Wages Expense 3,300
732 Utilities Expense 850
$101,550 $101,550


In addition to those accounts listed on the trial balance, the chart of accounts for Skysong, Inc. 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, 2020.
2. A count of supplies shows $800 of unused supplies on May 31.
3. Annual depreciation is $2,976 on the buildings and $1,488 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 $800 are accrued and unpaid at May 31.

Homework Answers

Answer #1

No.

Date

Account titles and explanation

Debit

Credit

1

May-31

Insurance expense [3000/12]

$ 250

Prepaid insurance

$ 250

2

May-31

Supplies expense [2050-800]

$ 1250

Supplies

$ 1250

3

May-31

Depreciation expense

$ 372

Accumulated depreciation - Buildings ($2,976 /12 months)

$ 248

Accumulated depreciation - Equipment ($1488/12 months)

$ 124

4

May-31

Interest expense [40000 *12/100 *1/12]

$ 400

Interest payable

$ 400

5

May-31

Unearned rent revenue [3100*2/3]

$ 2067

Rent revenue

$ 2067

6

May-31

Salaries and wages expense

$ 800

Salaries and wages payable

$ 800

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