Neosho River Resort opened for business on June 1 with eight air-conditioned units. - TEMPLATE

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			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 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.)

Instructions

(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.

J1
Date		Account/Description	Debit	Credit
Aug.	31
		(To record expired insurance)
	31
		(To record supplies used)
	31
		(To record cottage depreciation)
	31
		(To record furniture depreciation)
	31
		(To record rent earned)
	31
		(To record accrued wages)
	31
		(To record accrued rent)
	31
		(To record interest expense)

(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.)  (If an amount should be blank, enter a zero. All boxes must be filled to be correct.)

Cash						No. 101
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
Accounts Receivable						No. 112
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Adjusting	J1
Supplies						No. 126
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
	31	Adjusting	J1
Prepaid Insurance						No. 130
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
	31	Adjusting	J1
Land						No. 140
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
Cottages						No. 143
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
Accumulated Depreciation—Cottages						No. 144
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Adjusting	J1
Furniture						No. 149
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
Accumulated Depreciation—Furniture						No. 150
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Adjusting	J1
Accounts Payable						No. 201
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
Unearned Rent						No. 208
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
	31	Adjusting	J1
Salaries Payable						No. 212
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Adjusting	J1
Interest Payable						No. 230
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Adjusting	J1
Mortgage Payable						No. 275
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
P. Harder, Capital						No. 301
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
P. Harder, Drawing						No. 306
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
Rent Revenue						No. 429
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
	31	Adjusting	J1
	31	Adjusting	J1
Depreciation Expense—Cottages						No. 620
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Adjusting	J1
Depreciation Expense—Furniture						No. 621
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Adjusting	J1
Repair Expense						No. 622
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
Supplies Expense						No. 631
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Adjusting	J1
Interest Expense						No. 718
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Adjusting	J1
Insurance Expense						No. 722
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Adjusting	J1
Salaries Expense						No. 726
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P
	31	Adjusting	J1
Utilities Expense						No. 732
Date		Explanation	Ref.	Debit	Credit	Balance
Aug.	31	Balance	P

(c) Prepare an adjusted trial balance on August 31. (If an amount should be blank, enter a zero. All boxes must be filled to be correct.)

NEOSHO RIVER RESORT
Adjusted Trial Balance
August 31, 2010
	Debit		Credit
Cash	$		$
Accounts Receivable
Supplies
Prepaid Insurance
Land
Cottages
Accumulated Depreciation—Cottages
Furniture
Accumulated Depreciation—Furniture
Accounts Payable
Unearned Rent
Salaries Payable
Interest Payable
Mortgage Payable
P. Harder, Capital
P. Harder, Drawing
Rent Revenue
Depreciation Expense—Cottages
Depreciation Expense—Furniture
Repair Expense
Supplies Expense
Interest Expense
Insurance Expense
Salaries Expense
Utilities Expense
	$		$

(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. (List multiple entries from largest to smallest eg 10, 5, 3, 2. If amounts are the same, list alphabetically.  For the balance sheet, list assets in order of liquidity and liabilities from largest to smallest eg 10, 5, 3, 2, with accounts payable listed first.)

NEOSHO RIVER RESORT
Income Statement
Revenues
		$
Expenses
	$
Total expenses
Net income		$

 

NEOSHO RIVER RESORT
Owner's Equity Statement
	$
Add:
Less:
	$

 

NEOSHO RIVER RESORT
Balance Sheet
Assets
		$
	$
Less:
Less:
Total assets		$
Liabilities and Owner's Equity
Liabilities
		$
Total liabilities
Owner's equity
Total liabilities and owner's equity		$

 

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