(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:
1. The balance in prepaid insurance is a one-year premium paid on June 1, 2005.
2. An inventory count on August 31 shows $450 of supplies on hand.
3. Annual depreciation rates are cottages (4%) and furniture (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.

(b) Prepare an adjusted trial balance on August 31.

Transcribed Image Text:

GRECO RESORT TRIAL BALANCE AUGUST 31, 2005 Debit Credit Cash $ 19,600 Prepaid Insurance 4,500 Supplies 2,600 Land 20,000 Cottages 120,000 Furniture 16,000 Accounts Payable Unearned Rent Revenue Mortgage Payable $ 4,500 4,600 60,000 Common Stock 91,000 Retained Earnings 9,000 Dividends 5,000 Rent Revenue 76,200 Salaries Expense 44,800 Utilities Expense 9,200 Repair Expense 3,600 $245,300 $245,300