Death Valley Resort opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is presented here.
DEATH VALLEY RESORT
Trial Balance
August 31, 2012
                                          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
                                          $313,300 $313,300
Other data:
1. Insurance expires at the rate of $500 per month.
2. A count of supplies on August 31 shows $900 of supplies on hand.
3. Annual depreciation is $6,600 on buildings and $4,000 on equipment.
4. Unearned rent of $4,000 was earned prior to August 31.
5. Salaries of $600 were unpaid at August 31.
6. Rentals of $1,600 were due from tenants at August 31. (Use Accounts Receivable.)
7. The mortgage interest rate is 6% per year. (The mortgage was taken out August 1.)
Instructions
(a) Journalize the adjusting entries on August 31 for the 3-month period June 1 August 31.
(b) Prepare a ledger using T accounts. Enter the trial balance amounts and post the adjusting entries.
(c) Prepare an adjusted trial balance on August 31.
(d) Prepare an income statement and a retained earnings statement for the 3 months ended August 31 and a classified balance sheet as of August 31.
(e) Identify which accounts should be closed on August 31.

Death Valley Resort opened for business on June 1 with eight air-co...