Question & Answer: Adjusting entries Greco Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on Au…..

Exercises 133 E3-10 (LO3) (Adjusting Entries) 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, 2017 Debit Credit Cash Prepaid Insurance Supplies Land Buildings Equipment Accounts Payable Unearned Rent Revenue Mortgage Payable Common Stock Retained Earnings Dividends Rent Revenue Salaries and Wages Expense Utilities Expenses Maintenance and Repairs Expense 19,600 4,500 2,600 20,000 120,000 16,000 $ 4,500 4,600 60,000 91,000 9,000 76,200 44,800 9,200 3,600 $245,300 $245.300 Other data: 1. The balance in prepaid insurance is a one-year premium paid on June 1, 2017. 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. The mortgage interest rate is 8% per year.

Adjusting entries Greco Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows. Other data: The balance in prepaid insurance is a one-year premium paid on June 1, 2017. An inventory count on August 31 shows $450 of supplies on hand. Annual depreciation rates are buildings (4%) and equipment (10%), Salvage value is estimated to be 10% of cost. Unearned Rent Revenue of $3, 800 was earned prior to August 31. Salaries of $375 were unpaid at August 31. Rentals of $800 were due from tenants at August 31. The mortgage interest rate is 8% per year.

Expert Answer



Income Statement					Journal Additional:
Expenses	Amount	Income	Amount		Prepaid Insurance:
To Opening Supplies	2600	By Rent Revenue	80800	(76200+3800+800)	Insurance Account Dr.	375
To Salaries & Wages Ex	45175	By Closing Supplies	450		To Prepaid Insurance		375
To Utilities Ex	9200				(Being one month transfeered)
To Depreciation	533.33
To Interest on Mortage	400				Depreciation Account Dr.	533.33
To Insurance Exp	375				To Building		400
To Maintainance & Repairs	3600				To Equipment		133.33
To Net Profit	19366.67				(Being Dep Booked)
Total	81250	Total	81250
					Transfer of Unearned Rent:
					Unearned Rent Account Dr.	3800
Balance Sheet					To Rent Revenue		3800
Liabilities	Amount	Assets	Amount		(Being Rent earned transferred)
Common Stock	91000	Buildings Net	119600
Retained Earnings Opening	9000				Salaries Account Dr.	375
Earned During the year	19366.67	Equipment Net	15866.7		To Salaries Payble		375
Dividend Payable	-5000	Land	20000		(Being Outstanding Salaries booked)
Mortgage Payable	60000	Rent Recievable	800
Int Payable on Mortage	400	Stock	450		Rent Recievable Account Dr	800
Unearned Rent	800				To Rent Revenue		800
Salaries Payable	375	Prepaid Rent	4125		(Being earned rent booked)
Account Payble	4,500	Cash	19600
Total	180,442	Total	180442		Interest on Mortagge Account Dr.	400
					To Int Payable on Mortgage		400
					(Being Interest for a month booked)

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