Greco Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows.

GRECO RESORT TRIAL BALANCE AUGUST 31, 2017
	Debit	Credit
Cash	\( 19,600
Prepaid Insurance	4,500
Supplies	2,600
Land	20,000
Buildings	120,000
Equipment	16,000
Accounts Payable		\) 4,500
Unearned Rent Revenue		4,600
Mortgage Payable		60,000
Common Stock		91,000
Retained Earnings		9,000
Dividends	5,000
Rent Revenue		76,200
Salaries and Wages Expense	44,800
Utilities Expenses	9,200
Maintenance and Repairs Expense	3,600
	\(245,300	\)245,300

Other data:

1. The balance in prepaid insurance is a one-year premium paid on June 1, 2017.
2. An inventory count on August 31 shows \(450 of supplies on hand.
3. Annual depreciation rates are buildings (4%) and equipment (10%). Salvage value is estimated to be 10% of cost.
4. Unearned Rent Revenue of \)3,800 was earned prior to August 31.
5. Salaries of \(375 were unpaid at August 31.
6. Rentals of \)800 were due from tenants at August 31.
7. The mortgage interest rate is 8% per year.

Instructions

(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31. (Omit explanations.)

(b) Prepare an adjusted trial balance on August 31.

Date

Particulars

Debit ($)

Credit ($)

1, Aug. 31

Insurance expense ($4,500 x3/12)

1,125

Prepaid expense

1,125

2, Aug. 31

Supplies expense ($2,600 - $450)

2,150

Supplies

2,150

3, Aug. 31

Depreciation expense

1,080

Accumulated depreciation –

Building

1,080

Aug. 31

Depreciation expense

360

Accumulated depreciation-

Equipment

360

4, Aug. 31

Unearned rent revenues

3,800

Rent revenue

3,800

5. Aug. 31

Salaries and wages expense

375

Salaries and wages payable

375

6, Aug. 31

Accounts receivable

800

Rent revenue

800

7, Aug. 31

Interest expense

1,200

Interest payable

($60,000 x 8% x 3/12)

1,200

GRECO RESORT

ADJUSTED TRIAL BALANCE

AUGUST 31, 2017

Debit

Credit

Cash

$ 19,600

Accounts receivables

800

Prepaid Insurance ($4,500 -$1,125)

3,375

Supplies

450

Land

20,000

Buildings

120,000

Accumulated depreciation-Building

$1,080

Equipment

16,000

Accumulated depreciation-Equipment

$360

Accounts Payable

$ 4,500

Unearned Rent Revenue ($4,600 - $3,800)

800

Interest payable

1,200

Salaries and wages payable

375

Mortgage Payable

60,000

Common Stock

91,000

Retained Earnings

9,000

Dividends

5,000

Rent Revenue ($76,200+$3,800+$800)

80,800

Salaries and Wages Expense ($44,800 + $375)

45,175

Utility Expenses

9,200

Maintenance and Repairs Expense

3,600

Insurance expense

1,125

Supplies expense

2,150

Depreciation expense ($1,080+$360)

1,440

Interest expense

1,200

$249,115

$249,115