Question

The ledger of Novak Corp.on March 31 of the current year includes the selected accounts below before adjusting entries have been prepared. Debit Credit Supplies $8,400 Prepaid Insurance 10,080 Equipment 70,000 Accumulated Depreciation-Equipment $23,520 Notes Payable 56,000 Unearned Rent Revenue 34,720 Rent Revenue 168,000 Interest Expense Salaries and Wages Expense 39,200 An analysis of the accounts shows the following. 1. The equipment depreciates $784 per month. 2. Half of the unearned rent revenue was earned during the quarter. 3. Interest of $1,120 is accrued on the notes payable. 4. Supplies on hand total $2,380. 5. Insurance expires at the rate of $1,120 per month. Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

No	Date	Account Titles and Explanation	Debit	Credit
1	Mar.31	Depreciation expense	$2,352
		Accumulated depreciation- equipment		$2,352
		( To record depreciation expense)
2	Mar.31	Unearned rent revenue	$17,360
		Rent revenue		$17,360
		( To record unearned rent revenue)
3	Mar.31	Interest expense	$1,120
		Interest payable		$1,120
		(To record interest expense)
4	Mar.31	Supplies expense	$6,020
		Supplies		$6,020
		( To record supplies expense)
5	Mar.31	Insurance expense	$3,360
		Prepaid insurance		$3,360
		( To record insurance expense)

1.

Depreciation expense per month = $784

Hence, Quarterly depreciation expense = 784 x 3

= $2,352

2.

Rent revenue earned = 34,720 x 1/2

= $17,360

4.

Supplies expense = Unadjusted supplies - Ending supplies

= 8,400-2,380

= $6,020

5.

Insurance expense per month = $1,120

Quarterly insurance expense = 1,120 x 3

= $3,360

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