Question

Sun Valley Resort opened for business on June 1 with eight air-conditioned units. After being in operation for one quarter, Sun Valley is putting together its financial statements. Its trial balance before adjustment on August 31 is presented here. Sun Valley Resort Trial Balance As of August 31, 2017 Debit Credit Cash $24,600 Prepaid Insurance 5,400 Supplies 4,300 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 Dividends 5,000 Rent Revenue 80,000 Salaries and Wages Expense 53,000 Utilities Expense 9,400 Maintenance and Repairs Expense 3,600 Totals $313,300 $313,300 Other data: a) On June 1, the company purchased a 12-month insurance policy. b) A count of supplies on August 31 shows $700 of supplies on hand. c) Unearned rent of $5,000 was earned prior to August 31. d) Salaries of $600 were unpaid at August 31. e) Rentals of $1,600 were due from tenants at August 31. f) The 15-year mortgage was taken out on June 1, payable annually with an interest rate of 9% per year. ?

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

2.) Prepare an income statement, statement of retained earnings and classified balance sheet for the end of the quarter, August 31.

(Need a lot of help with number 1 mostly, but if I could get help with both that would be great- thanks!)

Answer 1

Solution

Sun Valley Resort

1. Adjusting Entries –

Adjusting Entries -
Date	Account Titles and Explanation	Ref No.	Debit	Credit
31-Aug-17	Insurance Expense		$1,350
	Prepaid Insurance			$1,350
	(To record insurnace expense for 3 months, June to August 5,400 x 3/12 = $1,3500
b.	Supplies Expense		$3,600
	Supplies			$3,600
	(To record cost of supplies used; 4,300 - 700 = 3,600)
c.	Unearned Rent Revenue		$5,000
	Rent Revenue			$5,000
	(To record rent revenue earned up to August 31st)
d.	Salaries and Wages Expense		$600
	Salaries and Wages Payable			$600
	(To record unpaid salaries expense)
e.	Rent Receivable		$1,600
	Rent Revenue			$1,600
	(To record rentals due)
f.	Interest Expense		$2,700
	Interest Expense Payable			$2,700
	(To record interest expense due on mortgage; 120,000 x 9% x 3/12 = $2,700)

Ledger Accounts:

	Ledger Accounts:
		Salaries and Wages Expenses
Debit					Credit
Date	Description	Amount	Date	Description	Amount
	Balance	$53,000
	Salaries and Wages payable	$600	31-Aug-17	Balance	53,600
	Totals	$53,600		Totals	$53,600

				Insurance Expense
Debit											Credit
Date		Description		Amount		Date		Description			Amount
31-Aug		Prepaid Insurance		$1,350		31-Aug		Balance			$1,350
		Totals		$1,350		T		Totals			$1,350
				Prepaid Insurance
Debit											Credit
Date		Description		Amount		Date		Description			Amount
		Balance		$5,400		31-Aug		Insurance Expense			$1,350
						31-Aug		Balance			$4,050
		Toals		$5,400				Totals			$5,400
				Supplies Expense
Debit											Credit
Date		Description		Amount		Date		Description			Amount
31-Aug		Supplies		$3,600		31-Aug		Balance			$3,600
		Total		$3,600							$3,600
				Supplies
Debit											Credit
Date		Description		Amount		Date		Description			Amount
1-Jun		Balance		4,300		31-Aug		Balance			$700
						31-Aug		Supplies Expense			$3,600
				$4,300				Total			$4,300
				Unearned Rent Revenue
Debit											Credit
Date		Description		Amount		Date		Description			Amount
		Rent Revenue		$5,000				Balance			6,800
31-Aug		Balance		$1,800
		Totals		$6,800				total			$6,800
				Rent Receivable
Debit											Credit
Date		Description		Amount		Date		Description			Amount
31-Aug		Rent Revenue		$1,600		31-Aug		Balance			$1,600
		Totals		$1,600				Totals			$1,600
				Rent Revenue
Debit											Credit
Date		Description		Amount		Date		Description			Amount
31-Aug		Balance		$86,600		31-Aug		Balance			$80,000
								Unearned Rent Revenue			$5,000
								rent Receivable			$1,600
				$86,600							$86,600
Debit			Interest Expense						Credit
Date	Description		Amount		Date		Description		Amount
31-Aug	Interest Payable		$2,700		31-Aug		Balance		$2,700
	Totals						Totals		$2,700
Debit			Interest Payable						Credit
Date	Description		Amount		Date		Description		Amount
31-Aug	Balance		$2,700		31-Aug		Interest Expense		$2,700
	Totals		$2,700				Balance		$2,700

Sun Valley Resort
Trial Balance as of August 31, 2017 after Adjustments
Account Titles	Debit	Credit
Cash	$24,600
Prepaid Insurance	$4,050
Rent Receivable	$1,600
Supplies	$700
Land	$40,000
Buildings	$132,000
Equipment	$36,000
Salaries and Wages Expense	$53,600
Utilities Expense	$9,400
Maintenance and Repairs expense	$3,600
Insurance Expense	$1,350
Suppplies Expense	$3,600
Interest Expense	$2,700
Dividends	$5,000
Accounts Payable		$6,500
Salaries and Wages Payable		$600
Interest Payable		$2,700
Unearned Rent Revenue		$1,800
Mortgage Payable		$120,000
Common Stock		$100,000
Rent Revenue		$86,600
Totals	$318,200	318,200