In: Accounting
(Adjusting Entries)
Uhura Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows (in thousands).
Uhura Resort
Trial Balance
August 31, 2022
Debit | Credit | ||
cash | AED 19600 | ||
prepaid insurance | 4500 | ||
supplies | 2600 | ||
land | 20000 | ||
building | 120000 | ||
equipment | 16000 | ||
accounts payable | AED 4500 | ||
unearned rent revenue | 4600 | ||
mortgage payable | 50000 | ||
share capital- ordinary | 100000 | ||
retained earnings | 0 | ||
dividends | 5000 | ||
rent revenue | 86200 | ||
salaries and wages expenses | 44800 | ||
utilities expense |
9200 | ||
maintenance and repairs expense | 3600 | ||
AED 245300 | AED 245300 |
Other data:
1. The balance in prepaid insurance is a 1-year premium paid on June 1, 2022.
2. An inventory count on August 31 shows AED650 of supplies on hand.
3. Annual depreciation rates are buildings (4%) and equipment (10%). Residual value is estimated to be 10% of cost.
4. Unearned rent revenue of AED3,800 should be recognized as revenue prior to August 31.
5. Salaries and wages of AED375 were unpaid at August 31.
6. Rentals of AED800 were due from tenants at August 31.
7. The mortgage note is dated 1/1/2022. The mortgage interest rate is 8% per year.
Instructions
1. Journalize the adjusting entries on August 31 for the 3-month period June 1– August 31. (Omit explanations.)
2. Prepare an adjusted trial balance on August 31.