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Mountain #8530
The following is the unadjusted trial balance for Rocky Mountain
The following is the unadjusted trial balance for Rocky Mountain Resort Inc. at its year end,
August 31. The company adjusts its accounts annually.
Additional information:
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5. Customers must pay a $200 deposit if they want to book a cottage during the peak period. An
analysis of these bookings indicates 355 deposits were received and credited to Unearned
Revenue. Only 45 of these deposits have not been earned by August 31.
7. The August utility bill of $3,120 has not yet been recorded or paid.
8. On August 25, a local business contracted with Rocky Mountain to rent one of the cottages
for six months, starting October 1, at a rate of $3,000 per month. An advance payment equal to
two months' (October and November) rent was received on August 31 and credited to Rent
Revenue.
9. The mortgage interest rate is 7%. Interest has been paid to August 1; the next payment is
due September 1.
Instructions
(b) Prepare and post the adjusting journal entries for the year.
(c) PrepareanadjustedtrialbalanceatAugust31.
(d) Prepare an income statement, statement of changes in equity, and statement of financial
position for the year.
(e) A friend of yours is considering investing in the company and asks you to comment on the
results of operations and financial position. Is the company performing well or not? Does the
financial position look healthy or weak? Use specific information from the financial statements to
support your answer.
ANSWER
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