Homework SourseSun Valley Resort opened for business on June 1 with eight a
Sun Valley Resort opened for business on June 1 with eight air-conditioned units. After being in operation for one quarter, Sun Valley is putting together its financial statements. Its trial balance before adjustment on August 31 is presented here. Sun Valley Resort Trial Balance As of August 31, 2017 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 5,000 Rent Revenue 80,000 Salaries and Wages Expense 53,000 Utilities Expense 9,400 Maintenance and Repairs Expense 3,600 Totals $313,300 $313,300 Other data: a) On June 1, the company purchased a 12-month insurance policy. b) A count of supplies on August 31 shows $700 of supplies on hand. c) Unearned rent of $5,000 was earned prior to August 31. d) Salaries of $600 were unpaid at August 31. e) Rentals of $1,600 were due from tenants at August 31. f) The 15-year mortgage was taken out on June 1, payable annually with an interest rate of 9% per year. ?
1.) Prepare a ledger using T accounts. Enter the trial balance amounts and post the adjusting entries.
2.) Prepare an income statement, statement of retained earnings and classified balance sheet for the end of the quarter, August 31.
(Need a lot of help with number 1 mostly, but if I could get help with both that would be great- thanks!)
Solution
Solution
Sun Valley Resort
Adjusting Entries -
Date
Account Titles and Explanation
Ref No.
Debit
Credit
31-Aug-17
Insurance Expense
$1,350
Prepaid Insurance
$1,350
(To record insurnace expense for 3 months, June to August 5,400 x 3/12 = $1,3500
b.
Supplies Expense
$3,600
Supplies
$3,600
(To record cost of supplies used; 4,300 - 700 = 3,600)
c.
Unearned Rent Revenue
$5,000
Rent Revenue
$5,000
(To record rent revenue earned up to August 31st)
d.
Salaries and Wages Expense
$600
Salaries and Wages Payable
$600
(To record unpaid salaries expense)
e.
Rent Receivable
$1,600
Rent Revenue
$1,600
(To record rentals due)
f.
Interest Expense
$2,700
Interest Expense Payable
$2,700
(To record interest expense due on mortgage; 120,000 x 9% x 3/12 = $2,700)
Ledger Accounts:
Ledger Accounts:
Salaries and Wages Expenses
Debit
Credit
Date
Description
Amount
Date
Description
Amount
Balance
$53,000
Salaries and Wages payable
$600
31-Aug-17
Balance
53,600
Totals
$53,600
Totals
$53,600
Insurance Expense
Debit
Credit
Date
Description
Amount
Date
Description
Amount
31-Aug
Prepaid Insurance
$1,350
31-Aug
Balance
$1,350
Totals
$1,350
T
Totals
$1,350
Prepaid Insurance
Debit
Credit
Date
Description
Amount
Date
Description
Amount
Balance
$5,400
31-Aug
Insurance Expense
$1,350
31-Aug
Balance
$4,050
Toals
$5,400
Totals
$5,400
Supplies Expense
Debit
Credit
Date
Description
Amount
Date
Description
Amount
31-Aug
Supplies
$3,600
31-Aug
Balance
$3,600
Total
$3,600
$3,600
Supplies
Debit
Credit
Date
Description
Amount
Date
Description
Amount
1-Jun
Balance
4,300
31-Aug
Balance
$700
31-Aug
Supplies Expense
$3,600
$4,300
Total
$4,300
Unearned Rent Revenue
Debit
Credit
Date
Description
Amount
Date
Description
Amount
Rent Revenue
$5,000
Balance
6,800
31-Aug
Balance
$1,800
Totals
$6,800
total
$6,800
Rent Receivable
Debit
Credit
Date
Description
Amount
Date
Description
Amount
31-Aug
Rent Revenue
$1,600
31-Aug
Balance
$1,600
Totals
$1,600
Totals
$1,600
Rent Revenue
Debit
Credit
Date
Description
Amount
Date
Description
Amount
31-Aug
Balance
$86,600
31-Aug
Balance
$80,000
Unearned Rent Revenue
$5,000
rent Receivable
$1,600
$86,600
$86,600
Debit
Interest Expense
Credit
Date
Description
Amount
Date
Description
Amount
31-Aug
Interest Payable
$2,700
31-Aug
Balance
$2,700
Totals
Totals
$2,700
Debit
Interest Payable
Credit
Date
Description
Amount
Date
Description
Amount
31-Aug
Balance
$2,700
31-Aug
Interest Expense
$2,700
Totals
$2,700
Balance
$2,700
Sun Valley Resort
Trial Balance as of August 31, 2017 after Adjustments
Account Titles
Debit
Credit
Cash
$24,600
Prepaid Insurance
$4,050
Rent Receivable
$1,600
Supplies
$700
Land
$40,000
Buildings
$132,000
Equipment
$36,000
Salaries and Wages Expense
$53,600
Utilities Expense
$9,400
Maintenance and Repairs expense
$3,600
Insurance Expense
$1,350
Suppplies Expense
$3,600
Interest Expense
$2,700
Dividends
$5,000
Accounts Payable
$6,500
Salaries and Wages Payable
$600
Interest Payable
$2,700
Unearned Rent Revenue
$1,800
Mortgage Payable
$120,000
Common Stock
$100,000
Rent Revenue
$86,600
Totals
$318,200
318,200
| Adjusting Entries - | ||||
| Date | Account Titles and Explanation | Ref No. | Debit | Credit |
| 31-Aug-17 | Insurance Expense | $1,350 | ||
| Prepaid Insurance | $1,350 | |||
| (To record insurnace expense for 3 months, June to August 5,400 x 3/12 = $1,3500 | ||||
| b. | Supplies Expense | $3,600 | ||
| Supplies | $3,600 | |||
| (To record cost of supplies used; 4,300 - 700 = 3,600) | ||||
| c. | Unearned Rent Revenue | $5,000 | ||
| Rent Revenue | $5,000 | |||
| (To record rent revenue earned up to August 31st) | ||||
| d. | Salaries and Wages Expense | $600 | ||
| Salaries and Wages Payable | $600 | |||
| (To record unpaid salaries expense) | ||||
| e. | Rent Receivable | $1,600 | ||
| Rent Revenue | $1,600 | |||
| (To record rentals due) | ||||
| f. | Interest Expense | $2,700 | ||
| Interest Expense Payable | $2,700 | |||
| (To record interest expense due on mortgage; 120,000 x 9% x 3/12 = $2,700) |
