The accounting department for Fun in the Great Outdoors Resort, Inc., recorded the following journal entries for 2012, the first year of business:

Fun in the Great Outdoors generates revenue by renting mountainside cottages to vacationers to the area. When a reservation is made in advance, Fun in the Great Outdoors collects half the week’s rent to hold the reservation; however, Fun in the Great Outdoors does not require reservations, and sometimes customers will come in to rent a unit the same day. These types of transactions require that Fun in the Great Outdoors’ accounting department record some cash receipts as unearned revenues and others as earned revenues.

Requirements
1. Explain the transaction or event that resulted in each journal entry.
2. Post entries (a) through (o) to T-accounts and calculate the balance in each account.
3. Did Fun in the Great Outdoors generate net income or net loss for the period ending December 31, 2012? How can you tell?
4. Prepare the four financial statements required at year end.
5. Prepare the closing entries.

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Description Debit Credit a. Cash b. Office supplies c. Prepaid rent d. Building e. Cash 50,000 300 12,000 225,000 5,000 225 300 12,000 3,000 130 6,000 100 1,500 5,000 1,200 Common stock 50,000 300 12,000 225,000 5,000 225 300 12,000 3,000 130 6,000 100 1,500 5,000 1,200 Accounts payable Cash Note payable Unearned rent revenue Cash Cash f. Utilities expense Accounts pay able h. Cash Rent revenue i. Unearned rent revenue Rent revenue j Supplies expense Supplies k. Rent expense Prepaid rent I. Interest expense Interest payable Accumulated depreciation-building Cash m. Depreciation expense n. Dividends Salary expense O. Salaries payable