Saginaw Valley Resort, Adjustments

Saginaw Valley Resort opened for business on October 1 with eight air-conditioned
units. Shown on the IS&RE tab are the income statement and statement
of retained earnings worksheets, and shown on the BS tab is the balance
sheet worksheet. All dollar amounts on these financial statements are
before accrual basis adjustments. It is now the end of the year, December 31,
and you are preparing the final financial statements for publication. You now
need to update the accounts, in other words "adjust" the accounts, given the
information provided below. Please prepare the seven adjustments shown
below. Hint: for adjustments such as these, cash is never part of the adjustment.
The financial statement worksheets have all been preformatted for your
convenience.
Please sum and link the transaction analysis columns and worksheets such that
the financial statements are properly updated after each transaction, and
sum across to totals, as shown on the transactions direct to financial
statements online talks. Be sure the net income line in the statement of retained earnings
for each transaction is a formula consisting of the individual revenue and expense
items on the income statement, as shown in the online talks. Also be sure that
retained earnings on the balance sheet is linked to both net income and dividends
on the statement of retained earnings.
After properly setting up the transaction analysis worksheets, please record the
adjustments and transactions below directly into the transaction analysis worksheets.
Remember, if the income statement is effected, net income on the statement of
retained earnings must properly update and a formula must be used to do so, as shown
in the online talks. Retained earnings on the balance sheet must also update.

Adjustments
a) Insurance was paid on October 1, and it expires at the rate of $450 per month.
b) A count of supplies at the end of the year shows $700 of supplies still
on hand.
c) Depreciation for the year is $6,600 on buildings and $4,000 on equipment.
d) Unearned rent of $5,000 was earned as of December 31.
e) Salaries of $600 were unpaid at December 31.
f) Rentals of $1,600 were due from tenants at December 31 (use Accounts
receivable).
g) The mortgage interest rate is 4% annual interest. The mortgage was taken
out on October 1. The computation will be $120,000 x .04 x 3/12.
 Saginaw Valley Resort
Income Statement
Year ended December 31
a b c d e f g Revised
Rent revenue $ 86,000 5,000 1,600 $ 92,600
Total revenues 86,000 92,600
Expenses:
Wages 53,000 600 53,600
Utilities 9,400 9,400
Maintenance and repairs 3,600 3,600
Insurance - 1,350 1,350
Supplies - 3,600 3,600
Depreciation - 10,600 10,600
Interest - 1,200 1,200
Total expenses 66,000 83,350
Net income $ 20,000 $ 9,250

Saginaw Valley Resort

Statement of Retained Earnings
Year ended December 31
Beginning retained earnings $ - $ -
Add net income 20,000 (1,350) (3,600) (10,600) 5,000 (600) 1,600 (1,200) 9,250
Minus dividends (5,000) (5,000)
Ending retained earnings $ 15,000 $ 4,250
 Saginaw Valley Resort
Balance Sheet
December 31
CURRENT ASSETS a b c d e f g Revised
Cash $ 30,600 $ 30,600
Accounts receivable - 1,600 1,600
Prepaid insurance 5,400 (1,350) 4,050
Supplies 4,300 (3,600) 700
Total current assets 40,300 36,950
PLANT AND EQUIPMENT
Land 40,000 40,000
Buildings 132,000 132,000
Equipment 36,000 36,000
Accumulated depreciation - (10,600) (10,600)
Net plant and equipment 208,000 197,400
Total assets $ 248,300 $ 234,350

CURRENT LIABILITIES
Accounts payable $ 6,500 $ 6,500
Unearned rent revenue 6,800 (5,000) 1,800
Salaries payable - 600 600
Interest payable - 1,200 1,200
Total current liabilities 13,300 10,100
Long-term mortgage payable 120,000 120,000
Total liabilities 133,300 130,100
STOCKHOLDERS' EQUITY
Common stock 100,000 100,000
Retained earnings 15,000 (1,350) (3,600) (10,600) 5,000 (600) 1,600 (1,200) 4,250
Total stockholders' equity 115,000 104,250
Total liabilities and stockholders' equity $ 248,300 $ 234,350