Problem
Monty Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows.
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MONTY RESORT
TRIAL BALANCE
AUGUST 31, 2017
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Debit
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Credit
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Cash
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$25,900
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|
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Prepaid Insurance
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10,800
|
|
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Supplies
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8,900
|
|
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Land
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22,000
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|
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Buildings
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122,000
|
|
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Equipment
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18,000
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|
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Accounts Payable
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$10,800
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Unearned Rent Revenue
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10,900
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Mortgage Payable
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62,000
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Common Stock
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99,300
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Retained Earnings
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|
9,000
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Dividends
|
5,000
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|
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Rent Revenue
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|
78,200
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Salaries and Wages Expense
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44,800
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|
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Utilities Expenses
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9,200
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|
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Maintenance and Repairs Expense
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3,600
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|
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Totals
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$270,200
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$270,200
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Other data:
1. The balance in prepaid insurance is a one-year premium paid on June 1, 2017.
2. An inventory count on August 31 shows $443 of supplies on hand.
3. Annual depreciation rates are
(a) buildings (4%)
(b) equipment (10%).
Salvage value is estimated to be 10% of cost.
4. Unearned Rent Revenue of $3,472 was earned prior to August 31.
5. Salaries of $392 were unpaid at August 31.
6. Rentals of $873 were due from tenants at August 31. (Use Accounts Receivable account.)
7. The mortgage interest rate is 8% per year.
Required
Journalize the adjusting entries on August 31 for the 3-month period June 1-August 31.
Prepare an adjusted trial balance on August 31.