Greco Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows. Greco ResortTrial BalanceAugust 31, 2020 Debit Credit Cash $ 19,600 Prepaid Insurance 4,500 Supplies 2,600 Land 20,000 Buildings 120,000 Equipment 16,000 Accounts Payable $ 4,500 Unearned Rent Revenue 4,600 Mortgage Payable 60,000 Common Stock 91,000 Retained Earnings 9,000 Dividends 5,000 Rent Revenue 76,200 Salaries and Wages Expense 44,800 Utilities Expenses 9,200 Maintenance and Repairs Expense 3,600 000,000 $245,300 $245,300 Other data: 1. The balance in prepaid insurance is a one-year premium paid on June 1, 2020. 2. An inventory count on August 31 shows $450 of supplies on hand. 3. Annual depreciation rates are buildings (4%) and equipment (10%). Salvage value is estimated to be 10% of cost. 4. Unearned Rent Revenue of $3,800 was earned prior to August 31. 5. Salaries of $375 were unpaid at August 31. 6. Rentals of $800 were due from tenants at August 31. 7. The mortgage interest rate is 8% per year. Instructions a. Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31. (Omit explanations.) b. Prepare an adjusted trial balance on August 31.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Greco Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows.

Greco Resort Trial Balance August 31, 2020
		Debit	Credit
Cash	$ 19,600
Prepaid Insurance	4,500
Supplies	2,600
Land	20,000
Buildings	120,000
Equipment	16,000
Accounts Payable		$ 4,500
Unearned Rent Revenue		4,600
Mortgage Payable		60,000
Common Stock		91,000
Retained Earnings		9,000
Dividends	5,000
Rent Revenue		76,200
Salaries and Wages Expense	44,800
Utilities Expenses	9,200
Maintenance and Repairs Expense	3,600	000,000
	$245,300	$245,300

Other data:

1. The balance in prepaid insurance is a one-year premium paid on June 1, 2020.

2. An inventory count on August 31 shows $450 of supplies on hand.

3. Annual depreciation rates are buildings (4%) and equipment (10%). Salvage value is estimated to be 10% of cost.

4. Unearned Rent Revenue of $3,800 was earned prior to August 31.

5. Salaries of $375 were unpaid at August 31.

6. Rentals of $800 were due from tenants at August 31.

7. The mortgage interest rate is 8% per year.

Instructions

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

b. Prepare an adjusted trial balance on August 31.

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