E3-10B (Adjusting Entries) Gonzalez Resort opened for business on June 1 with eight air-conditioned units.

E3-10B (Adjusting Entries) Gonzalez Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows.

Other data:

1. The balance in prepaid insurance is a one-year premium paid on June 1, 2014.

2. An inventory count on August 31 shows $45 of supplies on hand.

3. Annual depreciation rates are cottages (10%) and furniture (15%). Salvage value is estimated to be 10% of cost.

4. Unearned Rent Revenue of $380 was earned prior to August 31.

                                                         GONZALEZ RESORT

                                                               TRIAL BALANCE

                                                             AUGUST 31, 2014

                                               Debit                                    Credit

Cash                                     $ 1,960

Prepaid Insurance                      440

Supplies                                     260

Land                                       2,000

Buildings                               12,000

Equipment                              1,600

Accounts Payable                                                               $ 450

Unearned Rent Revenue                                                        460

Mortgage Payable                                                              6,000

Common Stock                                                                  9,100

Retained Earnings                                                                 890

Dividends                                 500

Rent Revenue                                                                    7,620

Salaries and Wages Expense  4,480

Utilities Expense                     920

Maintenance and R. Expense   360

                                        $24,520                                $24,520

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5. Salaries of $38 were unpaid at August 31.

6. Rentals of $80 were due from tenants at August 31.

7. The mortgage interest rate is 6% per year.

Instructions

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

(b) Prepare an adjusted trial balance on August 31.