Question

Exercise 3-05 The ledger of Oriole Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. Credit Debit $3,828 2.783 26,790 Prepaid Insurance Supplies Equipment Accumulated Depreciation Equipment Notes Payable Unearned Rent Revenue Rent Revenue Interest Expense Salaries and Wages Expense $7,940 21,410 4,770 59,170 13,840 An analysis of the accounts shows the following. 1. The equipment depreciates $246 per month 2. One-third of the unearned rent was recognized as revenue during the quarter. 3. Interest of $510 is accrued on the notes payable. 4. Supplies on hand total $616. 5. Insurance expires at the rate of $319 per month. 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 Expenses. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter o for the amounts.)

Answer 1

Date	General Journal	Debit	Credit
March 31	Depreciation expense	$738
	Accumulated depreciation - Equipment		$738
	( To record depreciation expense)
March 31	Unearned rent revenue	$1,590
	Rent revenue		$1,590
	( to record rent revenue)
March 31	Interest expense	$510
	Interest payable		$510
	( To record interest expense)
March 31	Supplies expense	$2,167
	Supplies		$2,167
	( To record supplies expense)
March 31	Insurance expense	$957
	Prepaid insurance		$957
	( To record insurance expense)

1. Depreciation expense = $246 per month

Quarterly depreciation expense = 246 x 3

= $738

2. Unearned rent Revenue earned = 4,770 x 1/3

= $1,590

4. Supplies expense = Supplies beginning - Supplies ending

= 2,783-616

= $2,167

5. Insurance expense = $319 per month

Quarterly insurance expense = 319 x 3

= $957

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