Question & Answer: P3-2B Maquoketa River Resort opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is a follows……

P3-2B Maquoketa River Resort opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is a follows.

Show transcribed image textP3-2B Maquoketa River Resort opened for business on June 1 with eight air- conditioned units. Its trial balance before adjustment on August 31 is as follows MAQUOKETA RIVER RESORT Trial Balance August 31, 2019 Debit $ 19,600 3,300 6,000 25,000 125,000 26,000 Account Number Credit 101 126 140 141 149 201 208 275 311 332 429 622 726 732 Cash Supplies Prepaid Insurance Land Buildings Equipment Accounts Pavable Unearned Rent Revenue Mortgage Payable Common Stock Dividends Rent Revenue Maintenance and Repairs Expense3,600 Salaries and Wages Expense 51,000 Utilities Expense $ 6,500 7,400 80,000 100,000 5,000 80,000 9.400 $273,900 $273,900 In addition to those accounts listed on the trial balance, the chart of accounts for Maquoketa River Resort also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 142 Accumulated Depreciation- Buildings, No. 150 Accumulated Depreciation-Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 619 Depreciation Expense, No 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense Other data 1. Insurance expires at the rate of $300 per month. 2. A count on August 31 shows $800 of supplies on hand 3. Annual depreciation is $6,000 on buildings and $2,400 on equipment. 4. Unearned rent revenue of $4.800 has been earned 5. Salaries of $400 were unpaid at August 31 6. Rentals of $4,000 were due from tenants at August 31 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- (c) Adj. trial balance $281,000 August 31 (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.) (c) Prepare an adjusted trial balance on August 31 (d) Prepare an income statement and a retained earnings statement for the 3 months ending August 31 and a balance sheet as of August 31

Expert Answer

(a) Adjusting journal entries

Number	Account Titles and Explanation	Debit	Credit
1	Insurance expense ($300 x 3 months)	900
	Prepaid insurance		900
	(Insurance expired for 3 months)
2	Supplies expense ($3300 – $800)	2500
	Supplies		2500
	(Supplies expense)
3	Depreciation expense	2100
	Accumulated depreciation-Building ($6000 x 3/12)		1500
	Accumulated depreciation-Equipment ($2400 x 3/12)		600
	(Depreciation expense for 3 months)
4	Unearned rent revenue	4800
	Rent revenue		4800
	(Rent revenue earned)
5	Salaries and Wages expense	400
	Salaries and Wages payable		400
	(Unpaid salaries accrued)
6	Accounts receivable	4000
	Rent revenue		4000
	(Rent revenue accrued)
7	Interest expense (9% x $80000 x 1/12)	600
	Interest payable		600
	(Mortgage interest payable)

(b) Ledger accounts

Accounts Receivable
Date		Debit	Credit	Balance
Aug. 31	J1	4000		4000



Supplies
Aug. 31	Balance			3300
	J1		2500	800

Prepaid Insurance
Aug. 31	Balance			6000
	J1		900	5100


Unearned Rent Revenue
Aug. 31	Balance			7400
	J1	4800		2600


Rent Revenue
Aug. 31	Balance			80000
	J1		4800	84800
	J1		4000	88800

Salaries and Wages Expense
Aug. 31	Balance			51000
	J1	400		51400


Depreciation Expense
Aug. 31	J1	2100		2100

Supplies Expense
Aug. 31	J1	2500		2500

Interest Expense
Aug. 31	J1	600		600


Insurance Expense
Aug. 31	J1	900		900

Interest Payable
Aug. 31	J1		600	600

Accumulated Depreciation – Building
Aug. 31	J1		1500	1500


Accumulated Depreciation – Equipment
Aug. 31	J1		600	600

Please note: Due to the length of the solution and lack of time, only ledger accounts affected by the adjusting entries have been prepared. The balances for the other accounts are directly taken to the adjusted trial balance.

Maquoketa River Resort
Adjusted Trial Balance
August 31, 2019
Account Number	Account Title	Debit	Credit
101	Cash	19600
112	Accounts Receivable	4000
126	Supplies	800
130	Prepaid Insurance	5100
140	Land	25000
141	Buildings	125000
142	Accumulated Depreciation – Buildings		1500
149	Equipment	26000
150	Accumulated Depreciation – Equipment		600
201	Accounts Payable		6500
208	Unearned Rent Revenue		2600
212	Salaries and Wages Payable		400
230	Interest Payable		600
275	Mortgage Payable		80000
311	Common stock		100000
332	Dividends	5000
429	Rent Revenue		88800
619	Depreciation Expense	2100
622	Maintenance and Repairs Expense	3600
631	Supplies Expense	2500
718	Interest Expense	600
722	Insurance Expense	900
726	Salaries and Wages Expense	51400
732	Utilities Expense	9400
		281000	281000

(d)

Maquoketa River Resort
Income Statement
For the Three Months Ended August 31, 2019
Rent revenue $		88800
Less: Operating expenses
Depreciation Expense	2100
Maintenance and Repairs Expense	3600
Supplies Expense	2500
Interest Expense	600
Insurance Expense	900
Salaries and Wages Expense	51400
Utilities Expense	9400
Total Operating expenses		70500
Net income $		18300

Maquoketa River Resort
Statement of Retained Earnings
For the Three Months Ended August 31, 2019
Beginning balance $	0
Net income	18300
	18300
Dividends	-5000
Ending balance $	13300

Maquoketa River Resort
Balance Sheet
August 31, 2019
Assets
Cash		19600
Account Receivable		4000
Supplies		800
Prepaid Insurance		5100
Total current assets			29500
Land		25000
Buildings	125000
Accumulated Depreciation – Buildings	-1500	123500
Equipment	26000
Accumulated Depreciation – Equipment	-600	25400
Total fixed asset			173900
Total Assets			203400
Liabilities and Owner’s Equity
Liabilities
Accounts Payable		6500
Unearned Rent Revenue		2600
Salaries and Wages Payable		400
Interest Payable		600
Mortgage Payable		80000
Total Liabilities			90100
Owner’s Equity
Common stock		100000
Retained earning		13300
Total Owner’s equity			113300
Total Liabilities and Owner’s Equity			203400

Still stressed from student homework?

Get quality assistance from academic writers!

Order now