Highlands Golf Inc. was organized on July 1, 2007. Quarterly financial state- Prepare adjusting entries and ments are prepared. The trial balance and adjusted trial balance on September 30 are _ financial statements; identify shown here. accounts to be closed.

(SO1A 5G, 7)

HIGHLANDS GOLF INC. [GLS]

Trial Balance September 30, 2007 Unadjusted Adjusted

‘Dr. Cr. Dr. Cr.

Cash $ 6,700 $ 6,700 Accounts Receivable 400 1,000 Prepaid Rent 1,800 900 Supplies 1,200 860 Equipment 15,000 15,000 Accumulated Depreciation—Equipment $ 350 Notes Payable $ 5,000 5,000 Accounts Payable 710 1,710 Salaries Payable 600 Interest Payable 50 Unearned Rent Revenue 1,000 600 Common Stock 14,000 14,000 Retained Earnings 0 0 Dividends 600 600 Dues Revenue 13,800 14,400 Rent Revenue 400 800 Salaries Expense 8,800 9,400 Rent Expense 900 1,800 Depreciation Expense 350 Supplies Expense 340 Utilities Expense 510 510 Interest Expense 50

$35,910 $35,910 $37,510 $37,510 Instructions

(a) Journalize the adjusting entries that were made.

(b) Prepare an income statement and a retained earnings statement for the 3 months —

(b) Net income $ 2,750 ending September 30 and a classified balance sheet at September 30. Tot. assets $24,110

(c) Identify which accounts should be closed on September 30.

(d) If the note bears interest at 12%, how many months has it been outstanding?