Bramble Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows. BRAMBLE RESORT TRIAL BALANCE AUGUST 31, 2020
Debit Credit
Cash $23,800
Prepaid Insurance 8,700
Supplies 6,800
Land 28,000
Buildings 128,000
Equipment 24,000
Accounts Payable $8,700
Unearned Rent Revenue 8,800
Mortgage Payable 68,000
Common Stock 103,200
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
$281,900 $281,900
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 $461 of supplies on hand.
3. Annual depreciation rates are
(a) buildings (4%)
(b) equipment (10%).
(c) Salvage value is estimated to be 10% of cost.
4. Unearned Rent Revenue of $3,666 was earned prior to August 31.
5. Salaries of $346 were unpaid at August 31.
6. Rentals of $837 were due from tenants at August 31. (Use Accounts Receivable account.)
7. The mortgage interest rate is 8% per year. 4. 5. 6. 7.
Journalize the adjusting entries on August 31 for the 3-month period June 1-August 31.

Bramble Resort

Adjusting Journal Entries on August 31:

1. Debit Insurance Expense $2,175

Credit Prepaid Insurance $2,175

To record insurance expense for 3 months.

2. Debit Supplies Expense $6,339

Credit Supplies $6,339

To record supplies expense for the period.

3. Debit Depreciation Expense - Building $1,152

Credit Accumulated Depreciation - Building $1,152

To record depreciation expense for the period.

Debit Depreciation Expense - Equipment $540

Credit Accumulated Depreciation - Equipment $540

To record depreciation expense for the period.

4. Debit Unearned Rent Revenue $3,666

Credit Rent Revenue $3,666

To record rent revenue earned.

5. Debit Salaries Expense $346

Credit Salaries Payable $346

To accrue unpaid salaries.

6. Debit Accounts Receivable $837

Credit Rent Revenue $837

To record rentals due from tenants.

7. Debit Mortgage Interest Expense $1,360

Credit Mortgage Interest Payable $1,360

To record mortgage interest expense for the period.

Explanation:

a) Data and Calculations:

BRAMBLE RESORT TRIAL BALANCE AUGUST 31, 2020

                                                            Debit        Credit

Cash                                                 $23,800

Prepaid Insurance                                8,700

Supplies                                                6,800

Land                                                   28,000

Buildings                                           128,000

Equipment                                         24,000

Accounts Payable                                              $8,700

Unearned Rent Revenue                                    8,800

Mortgage Payable                                             68,000

Common Stock                                                103,200

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

                                                    $281,900 $281,900

b) Insurance Expense = $8,700 * 3/12 = $2,175

c) Supplies Expense = $6,339 ($6,800 - 461)

d) Depreciation Expense on Buildings = $1,152 ($128,000 - 12,800) * 4%) * 3/12

e) Depreciation Expense on Buildings = $540 ($24,000 -2,400) * 10%) * 3/12

f) Interest on Mortgage = $1,360 (68,000 * 8%) * 3/12