Maquoketa Valley Resort Opened For Business On June 1 With Eight Air Conditioned Uni 1782863

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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

5000

Rent Revenue

80000

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.