Spring River Resort Inc. opened for business on June 1 with eight air conditioned units. Its trial balance before adjustment on August 31 is as follows
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SPRING RIVER RESORT INC. Trial Balance August 31, 2008 |
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Account Number |
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Debit |
Credit |
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101 |
Cash |
$19,600 |
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|
126 |
Supplies |
3,300 |
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|
130 |
Prepaid Insurance |
6,000 |
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|
140 |
Land |
25,000 |
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|
143 |
Cottages |
125,000 |
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|
149 |
Furniture |
26,000 |
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|
201 |
Accounts Payable |
|
$6,500 |
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|
208 |
Unearned Rent |
|
7,400 |
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|
275 |
Mortgage Payable |
|
80,000 |
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|
311 |
Common Stock |
|
100,000 |
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|
320 |
Retained Earnings |
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–0– |
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|
332 |
Dividends |
5,000 |
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|
429 |
Rent Revenue |
|
80,000 |
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|
622 |
Repair Expense |
3,600 |
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|
726 |
Salaries Expense |
51,000 |
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|
732 |
Utilities Expense |
9,400 |
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$273,900 |
$273,900 |
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In addition to those accounts listed on the trial balance, the chart of accounts for Spring 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 of August 31 shows $900 of supplies on hand.
3. Annual depreciation is $3,600 on cottages and $2,400 on furniture.
4. Unearned rent of $4,100 was earned prior to August 31.
5. Salaries of $400 were unpaid at August 31.
6. Rentals of $800 were due from tenants at August 31. (Use Accounts Receivable.)
7. The mortgage interest rate is 9 percent per year. (The mortgage was taken out on August 1.)
Instructions
Journalize the adjusting entries on August 31 for the three month period June 1–
August 31.