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Neosho River Resort, Inc. opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is as follows. NEOSHO RIVER RESORT, INC. Trial Balance August 31, 2008 Account Number Debit Credit 101 Cash $19,600 126 Supplies 3,300 130 Prepaid Insurance 6,000 140 Land 25,000 143 Cottages 125,000 149 Furniture 26,000 201 Accounts Payable $6,500 208 Unearned Rent 7,400 275 Mortgage Payable 80,000 311 Common Stock 100,000 332 Dividends 5,000 429 Rent Revenue 80,000 622 Repair Expense 3,600 726 Salaries 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 Neosho River Resort also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 144 Accumulated Depreciation–Cottages, No. 150 Accumulated Depreciation–Furniture, No. 212 Salaries Payable, No. 230 Interest Payable, No. 320 Retained Earnings, No. 620 Depreciation Expense–Cottages, No. 621 Depreciation Expense–Furniture, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense. Other data: Insurance expires at the rate of $400 per month. A count on August 31 shows $600 of supplies on hand. Annual depreciation is $6,000 on cottages and $2,400 on furniture. Unearned rent of $4,100 was earned prior to August 31. Salaries of $400 were unpaid at August 31. Rentals of $1,000 were due from tenants at August 31. (Use Accounts Receivable.) 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. J1 Date Account / Description Debit Credit Aug. 31 Insurance Expense $ 1200 Prepaid Insurance $ 1200 (To record expired insurance) 31 Supplies Expense $ 2700 Supplies $ 2700 (To record supplies used) 31 Depreciation Expense?Cottages $ 1500 Acc. Depr.-Cottages $ 1500 (To record depreciation on cottages) 31 Depreciation Expense?Furniture $ 600 Acc. Depr.-Furniture $ 600 (To record depreciation on furniture) 31 Unearned Rent $ 4100 Rent Revenue $ 4100 (To record rent revenue earned) 31 Salaries Expense $ 400 Salaries Payable $ 400 (To record accrued salaries) 31 Accounts Receivable $ 1000 Rent Revenue $ 1000 (To record accrued rent revenue) 31 Interest Expense $ 600 Interest Payable $ 600 (To record interest on note) (b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Use J1 as the posting reference.) (If answer is zero, please enter 0. Do not leave any fields blank.) Cash No. 101 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 19600 Accounts Receivable No. 112 Date Explanation Ref. Debit Credit Balance Aug. 31 Adjusting J1 1000 0 1000 Supplies No. 126 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 3300 31 Adjusting J1 0 2700 600 Prepaid Insurance No. 130 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 6000 31 Adjusting J1 0 1200 4800 Land No. 140 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 25000 Cottages No. 143 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 125000 Accumulated Depreciation—Cottages No. 144 Date Explanation Ref. Debit Credit Balance Aug. 31 Adjusting J1 0 1500 1500 Furniture No. 149 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 26000 Accumulated Depreciation—Furniture No. 150 Date Explanation Ref. Debit Credit Balance Aug. 31 Adjusting J1 0 600 600 Accounts Payable No. 201 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 6500 Unearned Rent No. 208 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 7400 31 Adjusting J1 4100 0 3300 Salaries Payable No. 212 Date Explanation Ref. Debit Credit Balance Aug. 31 Adjusting J1 0 400 400 Interest Payable No. 230 Date Explanation Ref. Debit Credit Balance Aug. 31 Adjusting J1 0 600 600 Mortgage Payable No. 275 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 80000 Common Stock No. 311 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 100000 Dividends No. 332 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 5000 Rent Revenue No. 429 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 80000 31 Adjusting J1 0 4100 84100 31 Adjusting J1 0 1000 85100 Depreciation Expense—Cottages No. 620 Date Explanation Ref. Debit Credit Balance Aug. 31 Adjusting J1 1500 0 1500 Depreciation Expense—Furniture No. 621 Date Explanation Ref. Debit Credit Balance Aug. 31 Adjusting J1 600 0 600 Repair Expense No. 622 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 3600 Supplies Expense No. 631 Date Explanation Ref. Debit Credit Balance Aug. 31 Adjusting J1 2700 0 2700 Interest Expense No. 718 Date Explanation Ref. Debit Credit Balance Aug. 31 Adjusting J1 600 0 600 Insurance Expense No. 722 Date Explanation Ref. Debit Credit Balance Aug. 31 Adjusting J1 1200 0 1200 Salaries Expense No. 726 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 51000 31 Adjusting J1 400 0 51400 Utilities Expense No. 732 Date Explanation Ref. Debit Credit Balance Aug. 31 Balance P 9400 (c) Prepare an adjusted trial balance on August 31. (If answer is zero, please enter 0. Do not leave any fields blank.) NEOSHO RIVER RESORT, INC. Adjusted Trial Balance August 31, 2008 Debit Credit Cash $ 19600 $ Accounts Receivable 1000 Supplies 600 Prepaid Insurance 4800 Land 25000 Cottages 125000 Accumulated Depreciation—Cottages 1500 Furniture 26000 Accumulated Depreciation—Furniture 600 Accounts Payable 6500 Unearned Rent 3300 Salaries Payable 400 Interest Payable 600 Mortgage Payable 80000 Common Stock 100000 Dividends 5000 Rent Revenue 85100 Depreciation Expense—Cottages 1500 Depreciation Expense—Furniture 600 Repair Expense 3600 Supplies Expense 2700 Interest Expense 600 Insurance Expense 1200 Salaries Expense 51400 Utilities Expense 9400 $ 278000 $ 278000 (d) Prepare an income statement and a retained earnings statement for the 3 months ending August 31 and a balance sheet as of August 31. (List amounts from largest to smallest eg 10, 5, 3, 2. If amounts are the same, list items alphabetically. For balance sheet, list assets in order of liquidity and liabilities from largest to smallest eg 10, 5, 3, 2, with accounts payable listed first. Enter all amounts as positive amounts and subtract where necessary.) NEOSHO RIVER RESORT, INC. Income Statement For the Three Months Ended August 31, 2008 Revenues Rent revenue $ 85100 Expenses Insurance expenseRepair expenseInterest expenseRent revenuePrepaid insuranceDeprec. expense-furnitureCottagesCashLandUnearned rentFurnitureUtilities expenseAccounts receivableSupplies expenseSuppliesAcc. Depr.-cottagesDeprec. expense-cottagesDividendsInterest payableAcc. Depr.-furnitureAccounts payableRetained earningsMortgage payableCommon stockSalaries payableSalaries expense $ Common stockUtilities expenseAccounts receivableInsurance expenseUnearned rentCottagesSalaries expenseSalaries payableInterest payableDeprec. expense-furnitureRetained earningsInterest expenseAcc. Depr.-furnitureDividendsRent revenueRepair expenseSupplies expenseDeprec. expense-cottagesMortgage payableCashSuppliesPrepaid insuranceLandFurnitureAcc. Depr.-cottagesAccounts payable Repair expense 3600 Supplies expense 2700 Accounts receivableMortgage payableRepair expenseDividendsUtilities expenseDeprec. expense-furnitureDeprec. expense-cottagesInsurance expensePrepaid insuranceCashSuppliesRent revenueInterest expenseLandUnearned rentCottagesInterest payableFurnitureSalaries payableAccounts payableAcc. Depr.-cottagesRetained earningsAcc. Depr.-furnitureSalaries expenseSupplies expenseCommon stock Insurance expense 1200 Common stockDeprec. expense-cottagesPrepaid insuranceLandAccounts receivableCottagesFurnitureSupplies expenseAccounts payableInterest payableSuppliesUtilities expenseAcc. Depr.-cottagesDeprec. expense-furnitureAcc. Depr.-furnitureRetained earningsUnearned rentInsurance expenseMortgage payableSalaries payableRepair expenseSalaries expenseRent revenueDividendsCash Prepaid insuranceUtilities expenseDeprec. expense-cottagesRepair expenseAccounts payableSalaries expenseInterest payableLandMortgage payableUnearned rentRent revenueSalaries payableSupplies expenseSuppliesCottagesFurnitureAcc. Depr.-cottagesDividendsCommon stockAcc. Depr.-furnitureRetained earningsCashInterest expenseInsurance expenseAccounts receivable Total expenses 71000 Net income $ 14100 NEOSHO RIVER RESORT, INC. Retained Earnings Statement For the Three Months Ended August 31, 2008 Retained earnings, June 1 $ 0 Add: Net income 14100 14100 Less: Dividends 5000 Retained earnings, August 31 $ 9100 NEOSHO RIVER RESORT, INC. Balance Sheet August 31, 2008 Assets Cash $ 19600 Accounts receivable 1000 Supplies 600 Prepaid insurance 4800 Land 25000 Cottages $ 125000 Less: Acc. depr.-cottages 1500 123500 Furniture 26000 Less: Acc. depr.-furniture 600 25400 Total assets $ 199900 Liabilities and Stockholders' Equity Liabilities Accounts payable $ 6500 Unearned rentInsurance expenseUtilities expenseAcc. depr.-cottagesDividendsFurnitureSuppliesRepair expenseDeprec. expense-furnitureLandInterest expenseInterest payableMortgage payableRetained earningsAcc. depr.-furnitureCottagesSalaries payableAccounts receivableCashCommon stockPrepaid insuranceRent revenueSalaries expenseSupplies expenseDeprec. expense-cottages FurnitureAccounts payablePrepaid insuranceAccounts receivableSuppliesCottagesDeprec. expense-cottagesUnearned rentCashInterest payableAcc. depr.-cottagesRent revenueSalaries expenseRetained earningsAcc. depr.-furnitureSalaries payableCommon stockSupplies expenseUtilities expenseRepair expenseInsurance expenseInterest expenseDeprec. expense-furnitureDividendsLandMortgage payable Interest payable 600 Prepaid insuranceCommon stockCashInterest payableLandSalaries payableAcc. depr.-cottagesDeprec. expense-furnitureUtilities expenseMortgage payableCottagesInterest expenseInsurance expenseSuppliesRent revenueSupplies expenseRetained earningsDividendsDeprec. expense-cottagesAccounts payableAcc. depr.-furnitureAccounts receivableUnearned rentFurnitureSalaries expenseRepair expense Total liabilities Stockholders' equity Common stock $ 100000 Supplies expenseDeprec. expense-cottagesRent revenueUtilities expenseSuppliesInsurance expenseSalaries expenseCommon stockRepair expenseUnearned rentInterest expensePrepaid insuranceDeprec. expense-furnitureCottagesAccounts receivableCashMortgage payableAcc. depr.-furnitureDividendsAccounts payableFurnitureLandRetained earningsSalaries payableAcc. depr.-cottagesInterest payable 9100 109100 Total liabilities and stockholders' equity $ 199900 Question Attempts: 2 of 3 used Copyright © 2000-2010 by John Wiley & Sons, Inc. or related companies. All rights reserved.

(a)

J1

|Date | |Account Titles and Explanation | |Ref. | |Debit | |Credit |

|Aug. 31 | |Insurance Expense ($400 X 3) | |722 | |1,200 | | |

| | |Prepaid Insurance | |130 | | | |1,200 |

| | | | | | | | | |

| 31 | |Supplies Expense ($3,300 – $600) | |631 | |2,700 | | |

| | |Supplies | |126 | | | |2,700 |

| | | | | | | | | |

| 31 | |Depreciation Expense—Cottages | |620 | |1,500 | | |

| | |  ($6,000 X 1/4) | | | | | | |

| | |Accumulated Depreciation— | | | | | | |

| | |  Cottages | |144 | | | |1,500 |

| | | | | | | | | |

| 31 | |Depreciation Expense—Furniture | |621 | |  600 | | |

| | |  ($2,400 X 1/4) | | | | | | |

| | |Accumulated Depreciation— | | | | | | |

| | |  Furniture | |150 | | | |  600 |

| | | | | | | | | |

| 31 | |Unearned Rent | |208 | |4,100 | | |

| | |Rent Revenue | |429 | | | |4,100 |

| | | | | | | | | |

| 31 | |Salaries Expense | |726 | |  400 | | |

| | |Salaries Payable | |212 | | | |  400 |

| | | | | | | | | |

| 31 | |Accounts Receivable | |112 | |1,000 | | |

| | |Rent Revenue | |429 | | | |1,000 |

| | | | | | | | | |

| 31 | |Interest Expense | |718 | |  600 | | |

| | |Interest Payable | |230 | | | |  600 |

| | |  [($80,000 X 9%) X 1/12] | | | | | | |

(b)

Cash No. 101

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | |19,600 |

Accounts Receivable No. 112

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Adjusting | |J1 | |1,000 | | | |  1,000  |

|Aug. 31 | |Balance | |Π | | | | | |  3,300 |

|31 | |Adjusting | |J1 | | | |2,700 | |    600 |

Prepaid Insurance No. 130

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | |  6,000 |

|31 | |Adjusting | |J1 | | | |1,200 | |  4,800 |

Land No. 140

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | | 25,000 |

Cottages No. 143

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | |125,000 |

Accumulated Depreciation—Cottages No. 144

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Adjusting | |J1 | | | |1,500 | |1,500 |

Furniture No. 149

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | | 26,000 |

Accumulated Depreciation—Furniture No. 150

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | |  6,500 |

Unearned Rent No. 208

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | |  7,400 |

|31 | |Adjusting | |J1 | |4,100 | | | |  3,300 |

Salaries Payable No. 212

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Adjusting | |J1 | | | |400 | |    400 |

Interest Payable No. 230

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Adjusting | |J1 | | | |600 | |    600 |

Mortgage Payable No. 275

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | | 80,000 |

Common Stock No. 311

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | |100,000 |

Dividends No. 332

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | | 5,000 |

Rent Revenue No. 429

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | |80,000 |

|31 | |Adjusting | |J1 | | | |4,100 | |84,100 |

|31 | |Adjusting | |J1 | | | |1,000 | |85,100 |

Depreciation Expense—Cottages No. 620

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Adjusting | |J1 | |1,500 | | | |1,500 |

Depreciation Expense—Furniture No. 621

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Adjusting | |J1 | |  600 | | | |   600 |

Repair Expense No. 622

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | | 3,600 |

Supplies Expense No. 631

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Adjusting | |J1 | |2,700 | | | | 2,700 |

Interest Expense No. 718

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Adjusting | |J1 | |  600 | | | |   600 |

Insurance Expense No. 722

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Adjusting | |J1 | |1,200 | | | | 1,200 |

Salaries Expense No. 726

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | |51,000 |

|31 | |Adjusting | |J1 | |  400 | | | |51,400 |

Utilities Expense No. 732

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Aug. 31 | |Balance | |Π | | | | | | 9,400 |

(c) NEOSHO RIVER RESORT, INC.

Adjusted Trial Balance

August 31, 2008

| | |Debit | |Credit |

| Cash | |$ 19,600 | | |

|Accounts Receivable | |1,000 | | |

|Supplies | |     600 | | |

|Prepaid Insurance | |   4,800 | | |

|Land | |  25,000 | | |

|Cottages | | 125,000 | | |

|Accumulated Depreciation—Cottages | | | |$  1,500 |

|Furniture | |  26,000 | | |

|Accumulated Depreciation—Furniture | | | |     600 |

|Accounts Payable | | | |   6,500 |

|Unearned Rent | | | |   3,300 |

|Salaries Payable | | | |     400 |

|Interest Payable | | | |     600 |

|Mortgage Payable | | | |  80,000 |

|Common Stock | | | | 100,000 |

|Dividends | |   5,000 | | |

|Rent Revenue | | | |  85,100 |

|Depreciation Expense—Cottages | |1,500 | | |

|Depreciation Expense—Furniture | |     600 | | |

|Repair Expense | |   3,600 | | |

|Supplies Expense | |   2,700 | | |

|Interest Expense | |     600 | | |

|Insurance Expense | |   1,200 | | |

|Salaries Expense | |  51,400 | | |

|Utilities Expense | |9,400 | |                |

| | |$278,000 | |$278,000 |

(d) NEOSHO RIVER RESORT, INC.

Income Statement

For the Three Months Ended August 31, 2008

Revenues

Rent revenue $ 85,100

Expenses

Salaries expense $51,400

Utilities expense   9,400

Repair expense   3,600

Supplies expense   2,700

Depreciation expense—cottages    1,500

Insurance expense   1,200

Interest expense     600

Depreciation expense—furniture 600

Total expenses 71,000

Net income $ 14,100

NEOSHO RIVER RESORT, INC.

Retained Earnings Statement

For the Three Months Ended August 31, 2008

Retained earnings, June 1 $ 0

Add: Net income 14,100

 14,100

Less: Dividends 5,000

Retained earnings, August 31 $ 9,100

NEOSHO RIVER RESORT, INC.

Balance Sheet

August 31, 2008

Assets

Cash $ 19,600

Accounts receivable      1,000

Supplies      600

Prepaid insurance    4,800

Land   25,000

Cottages $125,000

Less: Accum. depreciation—cottages 1,500  123,500

Furniture   26,000

Less: Accum. depreciation—furniture 600 25,400

Total assets $199,900

Liabilities and Stockholders’ Equity

Liabilities

Accounts payable $  6,500

Mortgage payable 80,000

Unearned rent    3,300

Interest payable      600

Salaries payable      400

Total liabilities   90,800

Stockholders’ equity

Common stock $100,000

Retained earnings       9,100

Total stockholders’ equity 109,100

Total liabilities and stockholders’

  equity $199,900

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