Sarasota Resort opened for business on June 1 with elght alr-conditioned units.

Question

Sarasota Resort opened for business on June 1 with elght alr-conditioned units. Its trial balance on August 31 is as follows. SARASOTA RESORT TRIAL BALANCE AUGUST 31, 2017 Debit Credit $24,700 9,600 7,700 24,000 124,000 20,000 Cash Prepaid Insurance Supplies Land Buildings Equipment Accounts Payable Unearned Rent Revenue Mortgage Payable Common Stock Retained Earnings Dividends Rent Revenue Salaries and Wages Expense Utilities Expenses Maintenance and Repairs Expense Totals $9,600 9,700 64,000 100,100 9,000 5,000 80,200 44,800 9,200 3,600 272,600$272,600

Explanation / Answer

(a)

Depreciation expense:

Buildings: $124000 x 90% x 4% x 3/12 = $1116

Equipment: $20000 x 90% x 10% x 3/12 = $450

(b)

(c)

Date Account Titles and Explanation Debit Credit 1 Aug. 31 Insurance expense ($9600 x 3/12) 2400 Prepaid insurance 2400 (To record expired insurance) 2 Aug. 31 Supplies expense ($7700 - $467) 7233 Supplies 7233 (To record supplies used) 3 Aug. 31 Depreciation expense-buildings 1116 Depreciation expense-equipment 450 Accumulated depreciation-buildings 1116 Accumulated depreciation-equipment 450 (To record depreciation expense) 4 Aug. 31 Unearned rent revenue 3476 Rent revenue 3476 (To record rent revenue earned) 5 Aug. 31 Salaries and wages expense 346 Salaries and wages payable 346 (To record unpaid salaries) 6 Aug. 31 Accounts receivable 802 Rent revenue 802 (To record rentals due but not received) 7 Aug. 31 Interest expense ($64000 x 8% x 3/12) 1280 Interest payable 1280 (To record interest acrued on mortgage)

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