The Highland Cove Resort has an August 31 fiscal year end and prepares adjusting entries on a…
The Highland Cove Resort has an August 31 fiscal year end and prepares adjusting entries on a monthly basis. The following trial balance was prepared before recording the August 31 month-end adjustments: Additional information: 1. The company pays $6,360 for its annual insurance policy on March 31 of each year. 2. A count shows $560 of supplies on hand on August 31, 2014. 3. The buildings have an estimated useful life of 50 years. 4. The furniture has an estimated useful life of 10 years. 5. Customers must pay a $100 deposit if they want to book a room during peak times. An analysis of these bookings indicates that 150 deposits were received (all credited to Unearned Revenue) and only 40 of the deposits have not yet been earned by August 31, 2014. 6. The mortgage interest rate is 6.5% per year. Interest has been paid to August 1, 2014. 7. Salaries accrued to the end of August were $1,450. 8. The August utility bill of $3,420 is unrecorded and unpaid. 9. On August 31, Highland Cove has earned $1,350 of rent revenue from customers who are currently renting rooms but will not pay the amount owing until they check out in September. This amount is in addition to any deposits earned in item (5) above. Instructions (a) Prepare the monthly adjusting journal entries on August 31. (b) Prepare a ledger, enter the trial balance amounts, and post the adjusting entries. (c) Prepare an adjusted trial balance at August 31. (d) Prepare an income statement and a s
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