Mountain Best Lodge has a May 31 fiscal year end and p
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Mountain Best Lodge has a May 31 fiscal year end and prepares adjusting entries on a monthly basis. The following tria
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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: 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 buildings were purchased on May 31, 1997, and have an estimated useful life of 40 years. 4. The furniture was purchased on June 1, 2011, 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 deposits have been earned by May 31, 2014. 6. The mortgage interest rate is 5.5% per year. Interest has been paid to May 1, 2014. 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 has earned $950 of rent revenue 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 earned in item (5) above. Instructions (a) Journalize the monthly adjusting entries on May 31. (b) Prepare a ledger. Enter the trial balance amounts and post the adjusting entries. (c) Prepare an adjusted trial balance at May 31. (d) Prepare an income statement and statement of owner's equity for the year ended May 31, and a balance sheet at May 31. TAKING IT FURTHER Is the owner's capital account on the May 31, 2014, adjusted trial balance the same amount as shown in the May 31, 2014, balance sheet? Why or why not?
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