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.
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MAQUOKETA VALLEY RESORT
Trial Balance
August 31, 2012
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Debit
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Credit
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Cash
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$ 24,600
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Prepaid Insurance
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5,400
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Supplies
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4,300
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Land
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40,000
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Buildings
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132,000
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Equipment
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36,000
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Accounts Payable
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$ 6,500
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Unearned Rent Revenue
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6,800
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Mortgage Payable
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120,000
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Common Stock
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100,000
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Dividends
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5000
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Rent Revenue
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80000
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Salaries and Wages Expense
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53,000
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Utilities Expense
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9,400
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Maintenance and Repairs Expense
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3,600
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$313,300
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$313,300
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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.