Neosho River Resort opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is as follows.
NEOSHO RIVER RESORT
Trial Balance
August 31, 2010
Account Number
Debit
Credit
101
Cash
$ 19,600
126
Supplies
3,300
130
Prepaid Insurance
6,000
140
Land
25,000
143
Cottages
125,000
149
Furniture
26,000
201
Accounts Payable
$ 6,500
209
Unearned Rent Revenue
7,400
275
Mortgage Payable
80,000
301
P. Harder, Capital
100,000
306
P. Harder, Drawing
5,000
429
Rent Revenue
80,000
622
Repair Expense
3,600
726
Salaries Expense
51,000
732
Utilities Expense
9,400
$273,900
$273,900
In addition to those accounts listed on the trial balance, the chart of accounts for Neosho River Resort also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 144 Accumulated Depreciation”Cottages, No. 150 Accumulated Depreciation”Furniture, No. 212 Salaries Payable, No. 230 Interest Payable, No. 620 Depreciation Expense”Cottages, No. 621 Depreciation Expense”Furniture, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.
Other data:
1.
Insurance expires at the rate of $400 per month.
2.
A count on August 31 shows $600 of supplies on hand.
3.
Annual depreciation is $6,000 on cottages and $2,400 on furniture.
4.
Unearned rent revenue of $4,100 was earned prior to August 31.
5.
Salaries of $400 were unpaid at August 31.
6.
Rentals of $1,000 were due from tenants at August 31. (Use Accounts Receivable.)
7.
The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)
Hint: Prepare adjusting entries, post, and prepare adjusted trial balance, and financial statements.
(SO 5, 6, 7)
Instructions
(a)
Journalize the adjusting entries on August 31 for the 3-month period June 1’August 31.
(b)
Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Use J1 as the posting reference.)
(c)
Prepare an adjusted trial balance on August 31.
Adj. trial balance $278,000
(d)
Prepare an income statement and an owner’s equity statement for the 3 months ending August 31 and a balance sheet as of August 31.
Net income $14,100
Ending capital balance $109,100
Total assets $199,900