Question

Silver Lake Resort opened for business on July 1 with eight air-conditioned units. Its trial balance before adjustment on December 31 in as follows.

Silver Lake Resort, Inc. Unadjusted Trial Balance December 31,2014
	Debit	Credit
Cash	$ 19,600
Supplies	3,300
Prepaid Insurance	6,000
Land	25,000
Buildings	125,000
Equipment	26,000
Accounts Payable		$6,500
Unearned Rent Revenue		7,400
Mortgage Payable		80,000
Share Capital-Ordinary		100,000
Dividends	5,000
Rent Revenue		80,000
Maintenance and Repairs Expense	3,600
Salaries and Wages Expense	51,000
Utilities Expense	9,400
	$273,900	$273,900

Other data for the adjustments (assuming no monthly adjustments before the fiscal year end):

Prepare adjusting journal entries for the following items.

1. Prepaid insurance of $6,000 was recorded on Sep 1, 2014 and the Insurance expires at the rate of $500 per month

2. A count of supplies on December 31 shows $1,000 on hand.

3. Depreciation for the period is $4,500 on buildings and $2,400 on equipment.

4. Unearned rent revenue of $4,000 out of previous balance $7,400 was now earned for services performed prior to December 31.

5. Salaries of $1,000 were unpaid at December 31.

6. Rentals of $3,000 were due from tenants at December 31 (use Accounts Receivables) [not yet received].

Prepare the adjusted trial balance, income statement, statement of retained earnings, and balance sheet. (you may use a separate sheet)

Answer 1

Silver Lake Resort, Inc.

General Journal ( Adjusting Entries)

For the Year Ended December 31,2014

Date	Accounts Title and Explanation	Debit	Credit
December 31 (A)	Insurance Expenses	$2,000
	Prepaid Insurance		$2,000
	(To record Insurance Expired)
December 31 (B)	Supplies Expenses	$2,300
	Supplies		$2,300
	(To record Supplies used)
December 31 (C)	Depreciation Expense, Building	$4,500
	Accumulated Depreciation, Building		$4,500
	Depreciation Expense, Equipment	$2,400
	Accumulated Depreciation, Equipment		$2,400
	(To record Depreciation on Building and Equipment)
December 31 (D)	Unearned Rent Revenue	$4,000
	Rent Revenue		$4,000
	(To record Earned Rent Revenue)
December 31 (E)	Salaries and Wages Expenses	$1,000
	Salaries and Wages Payable		$1,000
	(To record Salaries unpaid)
December 31 (F)	Accounts Receivable	$3,000
	Rent Revenue		$3,000
	(To record Rent Revenue not received)

Silver Lake Resort, Inc.

Worksheet

For the Year Ended December 31,2014

Accounts	Unadjusted	Trial Balance	Adjustments		Adjusted	Trial Balance
	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$19,600				$19,600
Supplies	3,300			$2,300	1,000
Prepaid Insurance	6,000			2,000	4,000
Accounts Receivable	0		$3,000		3,000
Land	25,000				25,000
Buildings	125,000				125,000
Equipment	26,000				26,000
Accounts Payable		$6,500				$6,500
Unearned Rent Revenue		7,400	4,000			3,400
Mortgage Payable		80,000				80,000
Share Capital- Ordinary		100,000				100,000
Dividends	5,000				5,000
Rent Revenue		80,000		7,000		87,000
Maintenance and Repairs Expense	3,600				3,600
Salaries and Wages Expense	51,000		1,000		52,000
Utilities Expense	9,400				9,400
Insurance Expense	0		2,000		2,000
Supplies Expense	0		2,300		2,300
Depreciation Expense, Buildings	0		4,500		4,500
Depreciation Expense, Equipment	0		2,400		2,400
Accumulated Depreciation, Buildings		0		4,500		4,500
Accumulated Depreciation, Equipment		0		2,400		2,400
Salaries and Wages Payable		0		1,000		1,000
Totals	$273,900	$273,900	$19,200	$19,200	$284,800	$284,800

Silver Lake Resort, Inc.

Income Statement

For the Year Ended December 31,2014

Accounts Title	Amount	Amount
Revenue:-
Rent Revenue		$87,000
Expenses:-
Maintenance and Repairs Expense	$3,600
Salaries and Wages Expense	52,000
Utilities Expense	9,400
Insurance Expense	2,000
Supplies Expense	2,300
Depreciation Expense, Buildings	4,500
Depreciation Expense, Equipment	2,400
Total Expenses		$(76,200)
Net Income		$10,800

Silver Lake Resort, Inc.

Statement of Retained Earnings

For the Year Ended December 31,2014

Accounts Title	Amount
Retained Earnings, Beginning	$0
Add:- Net Income	10,800
Less:- Dividends	(5,000)
Retained Earnings, Ending	$5,800

Silver Lake Resort, Inc

Balance Sheet

As on December 31,2014

Accounts Title	Amount	Amount
Assets:-
Current Assets:-
Cash	$19,600
Supplies	1,000
Prepaid Insurance	4,000
Accounts Receivable	3,000
Total Current Assets		$27,600
Long-term Assets:-
Land	25,000
Buildings	125,000
Less:- Accumulated Depreciation, Buildings	(4,500)
Equipment	26,000
Less:- Accumulated Depreciation, Equipment	(2,400)
Total Long-term Assets		$169,100
Total Assets		$196,700
Liabilities and Stockholders Equity:-
Current Liabilities:-
Accounts Payable	6,500
Unearned Rent Revenue	3,400
Salaries and Wages Payable	1,000
Total Current Liabilities		$10,900
Long-term Liabilities:-
Mortgage Payable	80,000
Total Long-term Liabilities		$80,000
Stockholders Equity:-
Share Capital - Ordinary	100,000
Retained Earnings	5,800
Total Stockholders Equity		$105,800
Total Liabilities and Stockholders Equity		$196,700

Notes:-

A. Insurance Expenses (from September 1To December 31) for 4months:-

=($500×4)

=$2,000

B. Supplies Available=$3,300

Supplies at the end=$1,000

Supplies Expenses=$(3,300-1,000)=$2,300