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.