Acc557 Financial Accounting: P3-2A Lazy River Resort opened for business on June 1

Acc557 Financial Accounting

Problem 3-2A
Lazy River Resort opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is as follows.
Lazy River Resort, Inc.
Trial Balance
August 31, 2014
Account Number Debit Credit
101 Cash 19,600
126 Supplies 3,300
130 Prepaid Insurance 6,000
140 Land 25,000
143 Buildings 125,000
157 Equipment 26,000
201 Accounts Payable 6,500
208 Unearned Rent Revenue 7,400
275 Mortgage Payable 80,000
311 Common Stock 100,000
332 Dividends 5,000
429 Rent Revenue 80,000
622 Maintenance and Repairs Expense 3,600
726 Salaries and Wages Expense 51,000
732 Utilities Expense 9,400
273,900 273,900

In addition to those accounts listed on the trial balance, the chart of accounts for Lazy River Resort also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 144 Accumulated Depreciation—Buildings, No. 158 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 631 Supplies Expense, No. 711 Depreciation Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

Other data:
1. Insurance expires at the rate of $400 per month.
2. A count on August 31 shows $900 of supplies on hand.
3. Annual depreciation is $4,500 on buildings and $2,400 on equipment.
4. Unearned rent revenue of $4,100 was recognized for services performed prior to August 31.
5. Salaries of $400 were unpaid at August 31.
6. Rentals of $3,700 were due from tenants at August 31. (Use Accounts Receivable.)
7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)

Instructions:
(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Post entries in the order of journal entries posted in the previous part of the question.)
c) Prepare an adjusted trial balance on August 31.
d) Prepare an income statement for the 3 months ending August 31
e) Prepare a retained earnings statement for the 3 months ending August 31. (List items that increase retained earnings first.)
f) Prepare a balance sheet as of August 31. (List assets in order of liquidity. List Property, plant and equipment in order of land, buildings and equipment.)
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