Insurance expires at the rate of 450 per month

Accounting Exercise 4-12, 4-2B And 4-3B

P4-2B Pamela Quinn started her own consulting firm, Quinn Consulting, on May 1, 2012. The trial balance at May 31 is as shown below.
QUINN CONSULTING Trial Balance May 31, 2012
Debit Credit Cash $ 7,500 Accounts Receivable 3,000 Prepaid Insurance 3,600 Supplies 2,500 Equipment 12,000 Accounts Payable $ 3,500 Unearned Service Revenue 4,000 Common Stock 19,100 Service Revenue 7,500 Salaries and Wages Expense 4,000 Rent Expense 1,500 $34,100 $34,100
In addition to those accounts listed on the trial balance, the chart of accounts for Quinn Consulting also contains the following accounts: Accumulated Depreciation—Equipment, Salaries and Wages Payable, Depreciation Expense, Insurance Expense, Utilities Expense, and Supplies Expense. Other data: 1. $750 of supplies have been used during the month. 2. Utility costs incurred but not paid are $260. 3. The insurance policy is for 2 years. 4. $1,500 of the balance in the Unearned Service Revenue account remains unearned at the end of the month. 5. Assume May 31 is a Thursday and employees are paid on Fridays. Quinn Consulting has two employees that are paid $600 each for a 5-day work week. 6. The equipment has a 5-year life with no salvage value and is being depreciated at $200 per month for 60 months. 7. Invoices representing $1,980 of services performed during the month have not been recorded as of May 31. Instructions (a) Prepare the adjusting entries for the month of May. (b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial bal- ance as beginning account balances. Use T accounts. (c) Prepare an adjusted trial balance at May 31, 2012.

P4-3B Maquoketa Valley Resort opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is presented here. MAQUOKETA VALLEY RESORT Trial Balance August 31, 2012
Debit Credit Cash $ 24,600 Prepaid Insurance 5,400 Supplies 4,300 Land 40,000 Buildings 132,000 Equipment 36,000 Accounts Payable $ 6,500 Unearned Rent Revenue 6,800 Mortgage Payable 120,000 Common Stock 100,000 Dividends 5,000 Rent Revenue 80,000 Salaries and Wages Expense 53,000 Utilities Expense 9,400 Maintenance and Repairs Expense 3,600 $313,300 $313,300
Other data: 1. Insurance expires at the rate of $450 per month. 2. A count of supplies on August 31 shows $700 of supplies on hand. 3. Annual depreciation is $6,600 on buildings and $4,000 on equipment. 4. Unearned rent of $5,000 was earned prior to August 31. 5. Salaries of $600 were unpaid at August 31. 6. Rentals of $1,600 were due from tenants at August 31. (Use Accounts Receivable.) 7. The mortgage interest rate is 9% per year. (The mortgage was taken out August 1.) Instructions (a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31. (b) Prepare a ledger using T accounts. Enter the trial balance amounts and post the adjusting entries. (c) Prepare an adjusted trial balance on August 31. (d) Prepare an income statement and a retained earnings statement for the 3 months ended August 31 and a classified balance sheet as of August 31. (e) Identify which accounts should be closed on August 31.