Boulder Resorts, Inc. (BRI) was organized on January 1, 2017 and below is the balance sheet after the first month of operation.

Boulder Resorts Inc.

Balance Sheet

As of January 31, 2017

Cash

22,000

Prepaid Insurance

600

Supplies

2,500

Land

55,000

Building

25,000

Furniture

15,000

Total Assets

120,100

Accounts Payable

6,500

Unearned Revenue

1,200

Interest Payable

300

Wages Payable

2,200

Notes Payable

30,000

Total Liabilities

40,200

Contributed Capital

55,000

Retained Earnings

24,900

Total Equity

79,900

Total Liabilities and Equity

120,100

February 2017 Transactions

Use the January balance sheet to create the opening balances, and then record the following transactions for the month of February.

February 2:BRI pre-paid $300 cash for an ad that will run in the newspaper for each of the next 6 months beginning March 1, 2017.

February 3:Stock was issued, in the amount of $10,000, for cash.

February 4:Additional furniture for the inn is purchased at a cost of $5,000 in cash.

February 6:BRI pays $250 for the utilities on the inn for the month of February.

February 14: A two-year, 6%, $50,000 promissory note was signed at the Second State Bank of Colorado. Interest and principal will be repaid on the maturity date in 2018.

February 15: Wages of $3,500 for the first half of February and last half of January (i.e. accrued in January) are paid in cash.

February 16: BRI paid vendors in full for items purchased in January on account.

February 18: A guest mails BRI $1,000 in cash in full payment for a room to be rented for two weeks. The guest plans to stay at the inn during the last week of February and the first week of March.

February 28: Receipts from rentals of rooms (in addition to the $1000 above) for the month amount to $25,000, of which $6,000 was received in cash and the remainder to be collected next month when the credit cards settle.

The following adjustments will be needed on February 28, 2016:

a.Interest on the promissory note.Remember, interest rates are stated on an annual basis and you should calculate interest for one month.Accrue both interest on the note borrowed in January (at 12%) and the additional amount borrowed in February (for half a month).

b.Recognition of a month of the expired portion of the insurance - it was a two-year policy paid at the end of January for $600.

c.Recognition of the earned portion of the guest's deposit.In addition to the amount received on February18 of which a portion was earned, the remainder of unearned revenue from January was earned the first week of February.

d.Wages earned during the second half of February amounted to $2,100 and will be paid in March.

e.Cleaning supplies on hand on February 28 amount to $1,100.

f.A cable bill for February amounts to $500 and is payable by March 5.

g.The building and furniture purchased in January were bought on the last day of the month and therefore not depreciated in January.February will be the first month of depreciation for all fixed assets.Land does not depreciate.Furniture has a 10 year life and the Building has a 20 year useful life.Using the straight-line method of depreciation record the depreciation expense on these fixed assets.

Required:

1.Record all February transactions.

2.Record all adjusting entries.