I have attempted this problem and my trial balance ended up not balancing so I a

Question

I have attempted this problem and my trial balance ended up not balancing so I am sure I made a mistake in my adjusting entries(Debits and Credits). So, here it goes...Business started on June 1, 2010 and the trial balance was prepared for August 31, 2010.

1. Insurance expires at the rate of $400 a month.
2. A count on Aug 31 shows $600 of supplies on hand. (trial balance shows $3300)
3.Annual depreciation is $6000 on cottages and $2400 on furniture.
4. Unearned rent revenue of $4100 was earned prior to Aug 31.
5. Salaries of $400 were unpaid at Aug 31.
6. Rentals of $1000 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 1st.

I had a hard time debiting and crediting the right accounts... please help

Explanation / Answer

I can give you the adjusting entries. From that you should be able to get your adjusted trial balance, income statement, and retained earnings statement. 1. Insurance expires at the rate of $400 per month. Dr Insurance Expense 1,200 Cr Prepaid Insurance 1,200 2. A count on August 31 shows $600 of supplies on hand. Dr Supplies Expense 2,700 Cr Supplies 2.700 3. Annual depreciation is $6,000 on cottages and $2,400 on furniture. Dr Depreciation Expense, Cottages 1,500 Cr Accumulated Depreciation, Cottages 1.500 Dr Depreciation Expense, Furniture 600 Cr Accumulated Depreciation, Furniture 600 4. Unearned rent of $4,100 was earned prior to August 31. Dr Unearned Rent 4,100 Cr Rent Revenue 4,100 5. Salaries of $400 were unpaid at August 31. Dr Salaries Expense 400 Cr Salaries Payable 400 6. Rentals of $1,000 were due from tenants at August 31. (Use Accounts Receivable.) Dr Accounts Receivable 1,000 Cr Rent Revenue 1,000 7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.) Dr Interest Expense 1,800 Cr Interest Payable 1,800

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