Death Valley Resort opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is presented here.

DEATH VALLEY RESORT Trial Balance August 31, 2014 Debit Credit Cash $ 24,600 Supplies 4,300 Prepaid Insurance 5,400 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 Debit Credit Dividends 5,000 Rent Revenue 80,000 Salaries and Wages Expense 53,000 Utilities Expense 9,400 Maintenance and Repairs Expense 3,600 $313,300 $313,300 Other data:
1 Insurance expires at the rate of $500 per month.
2 A count of supplies on August 31 shows $900 of supplies on hand.
3 Annual depreciation is $6,600 on buildings and $4,000 on equipment.
4 Unearned rent of $4,000 was earned prior to August 31.
5 Salaries of $600 were unpaid at August 31.
6 Rentals of $1,600 were due from tenants at August. 31. (Use Accounts Receivable.)

7 The mortgage interest rate is 6% per year. (The mortgage was taken out August 1.)

Instructions

(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.

(b) Prepare a ledger using T-accounts. Enter the trial balance amounts and post the adjusting entries.

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

(d) Prepare an income statement and a retained earnings statement for the 3 months ended August 31 and a classified balance sheet as of August 31.

(e) Identify which accounts should be closed on August 31.

AppendixLO1