After retiring from working in the high-tech industry, Albert Forges borrowed $79,000 and started a cottage rental

Question

After retiring from working in the high-tech industry, Albert Forges borrowed $79,000 and started a cottage rental business on June 1, 2021. The trial balance for Martinez Cottages on August 31, 2021 is as follows: Martinez Cottages Unadjusted Trial Balance August 31, 2021 Debit Credit Cash $5,200 Prepaid Insurance 3,800 Supplies 1,500 Land 22,000 Buildings 145,000 Furniture 17,000 Accounts Payable $4,500 Unearned Revenue 4,900 Notes Payable 79,000 A. Forges, Capital 87,000 A. Forges, Drawings 5,000 Rent Revenue 85,100 Salaries Expense 48,000 Utilities Expense 9,500 Repairs Expense 3,500 $260,500 $260,500 Other data: 1.The balance in Prepaid Insurance is a one-year premium paid on June 1, 2021.2.A count on August 31 shows $500 of supplies on hand.3.Annual depreciation for buildings is based on a 25-year useful life.4.Annual depreciation for furniture based on a 10-year useful life.5.Unearned Revenue of $3,500 for rent was earned prior to August 31.6.Salaries of $410 were unpaid at

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Adjusting Entries No. Date Account Titles and Explanation Debit Credit 1) Aug. 31 Insurance Expense $633 Prepaid Insurance ($3,800/12*2 months) $633 (To record the expiration of two months insurance) 2) Aug. 31 Supplies Expense $1,000 Supplies ($1,500 - $500) $1,000 (To record the usage of supplies) 3) Aug. 31 Depreciation Expense ($145,000/25 years) $5,800 Accumulated Depreciation - Building $5,800 (To record the depreciation on building) 4) Aug. 31 Depreciation Expense ($17,000/10 years) $1,700 Accumulated Depreciation - Furniture $1,700 (To record the depreciation on furniture) 5) Aug. 31 Unearned Service Revenue $3,500 Rent Revenue $3,500 (To record the revenue is earned) 6) Aug. 31 Salaries Expense $410 Salaries Payable $410 (To record the accrual of salaries expense) 7) Aug. 31 Accounts Receivable $850 Rent Revenue $850 (To record the rental feed earned) 8) Aug. 31 Interest Expense ($79,000*6/100*3/12 months) $1,185 Interest Payable $1,185 (To record the interest accrued on 6% note)

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After retiring from working in the high-tech industry, Albert Forges borrowed $79,000 and started a cottage rental business on June 1, 2021

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Archived Solution

Adjusting Entries
No.	Date	Account Titles and Explanation	Debit	Credit
1)	Aug. 31	Insurance Expense	$633
		Prepaid Insurance ($3,800/12*2 months)		$633
		(To record the expiration of two months insurance)
2)	Aug. 31	Supplies Expense	$1,000
		Supplies ($1,500 - $500)		$1,000
		(To record the usage of supplies)
3)	Aug. 31	Depreciation Expense ($145,000/25 years)	$5,800
		Accumulated Depreciation - Building		$5,800
		(To record the depreciation on building)
4)	Aug. 31	Depreciation Expense ($17,000/10 years)	$1,700
		Accumulated Depreciation - Furniture		$1,700
		(To record the depreciation on furniture)
5)	Aug. 31	Unearned Service Revenue	$3,500
		Rent Revenue		$3,500
		(To record the revenue is earned)
6)	Aug. 31	Salaries Expense	$410
		Salaries Payable		$410
		(To record the accrual of salaries expense)
7)	Aug. 31	Accounts Receivable	$850
		Rent Revenue		$850
		(To record the rental feed earned)
8)	Aug. 31	Interest Expense ($79,0006/1003/12 months)	$1,185
		Interest Payable		$1,185
		(To record the interest accrued on 6% note)