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Problem 4-6A Roadside Travel Court was organized on July 1, 2016, by Betty Johnson. Betty is...

Problem 4-6A

Roadside Travel Court was organized on July 1, 2016, by Betty Johnson. Betty is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Betty prepared the following income statement for her fourth quarter, which ended June 30, 2017.

ROADSIDE TRAVEL COURT
Income Statement
For the Quarter Ended June 30, 2017

Revenues

  Rent revenue

 $216,900

Operating expenses

  Advertising expense

 $ 3,830

  Salaries and wages expense

 84,370

  Utilities expense

 945

  Depreciation expense

 2,925

  Maintenance and repairs expense

4,330

  Total operating expenses

96,400

Net income

$120,500

Betty suspected that something was wrong with the statement because net income had never exceeded $30,000 in any one quarter. Knowing that you are an experienced accountant, she asks you to review the income statement and other data.

You first look at the trial balance. In addition to the account balances reported above in the income statement, the trial balance contains the following additional selected balances at June 30, 2017.

Supplies

 $ 8,710

Prepaid Insurance

 14,400

Notes Payable

 14,000

You then make inquiries and discover the following.
1. Roadside rentals revenues include advanced rental payments received for summer occupancy, in the amount of $57,120.
2. There were $1,835 of supplies on hand at June 30.
3. Prepaid insurance resulted from the payment of a one-year policy on April 1, 2017.
4. The mail in July 2017 brought the following bills: advertising for the week of June 24, $115; repairs made June 18, $4,815; and utilities for the month of June, $220.
5. Wages expense is $320 per day. At June 30, four days’ wages have been incurred but not paid.
6. The note payable is a 6% note dated May 1, 2017, and due on July 31, 2017.
7. Income tax of $14,325 for the quarter is due in July but has not yet been recorded.
Prepare any adjusting journal entries required at June 30, 2017. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Prepare a correct income statement for the quarter ended June 30, 2017.
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