Question

The ledger of Chan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared:

		Debit		Credit
Prepaid Insurance		$  2,700
Supplies		2,100
Equipment		18,750
Accumulated Depreciation—Equipment				$  6,300
Notes Payable				15,000
Unearned Rent Revenue				6,975
Rent Revenue				45,000
Interest Expense		–0–
Salaries and Wage Expense		10,500

An analysis of the accounts shows the following:

1. The equipment depreciates $188 per month.
2. One-third of the unearned rent was recognized as revenue during the quarter.
3. Interest of $375 is accrued on the notes payable.
4. Supplies on hand total $637.
5. Insurance expires at the rate of $225 per month.

Instructions

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are: Depreciation Expense; Insurance Expense; Interest Payable; and Supplies Expense.

Answer 1

Credit $ Adjusting Journal entries :- Date Accounts Title & Explanation Debit $ 31-Mar Depreciation Expense - Equipment (188*12) 2,256 To Accumulated Depreciation - Equipment (Entry for recording of depreciation expense on equipment) 2,256 2,325 31-Mar Unearned Rent Revenue (6975/3) To Rent Revenue (Entry for recording of Rent Revenue) 2,325 31-Mar 375 Interest Expense To Interest Payable (Entry for recording of Interest expense on Notes Payable) 375 31-Mar 1,463 Supplies Expense (2100-637) To Supplies (Entry for recording of Supplies consumed) 1,463 31-Mar 2,700 Insurance Expense (225*12) To Prepaid Insurance (Entry for recording of expired Insurance) 2,700