Exercise 3-10 (Part Level Submission)

Waterway Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows.
WATERWAY RESORT
TRIAL BALANCE
AUGUST 31, 2020

Debit Credit

Cash $25,300
Prepaid Insurance 10,200
Supplies 8,300
Land 28,000
Buildings 128,000
Equipment 24,000
Accounts Payable $10,200
Unearned Rent Revenue 10,300
Mortgage Payable 68,000
Common Stock 104,700
Retained Earnings 9,000
Dividends 5,000
Rent Revenue 84,200
Salaries and Wages Expense 44,800
Utilities Expenses 9,200
Maintenance and Repairs Expense 3,600

$286,400 $286,400

Other data:
1. The balance in prepaid insurance is a one-year premium paid on June 1, 2020.
2. An inventory count on August 31 shows $445 of supplies on hand.
3. Annual depreciation rates are
(a) buildings (4%)
(b) equipment (10%).
Salvage value is estimated to be 10% of cost.
4. Unearned Rent Revenue of $4,172 was earned prior to August 31.
5. Salaries of $365 were unpaid at August 31.
6. Rentals of $843 were due from tenants at August 31. (Use Accounts Receivable account.)
7. The mortgage interest rate is 8% per year.

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

(b) Prepare an adjusted trial balance