Question

The ledger of Crane Rental Agency on March 31 of the current year includes the selected accounts, shown below, before adjusting entries have been prepared. Credit Debit $ 14,400 2,900 25,000 $ 8.100 Prepaid Insurance Supplies Equipment Accumulated Depreciation Equipment Notes Payable Unearned Rent Revenue Rent Revenue Interest Expense Salaries and Wages Expense 23,000 12,600 61,000 0 11,000 An analysis of the accounts shows the following. 1. 2. 3. The equipment depreciates $400 per month. One-third of the unearned rent revenue was earned during the quarter. Interest of $575 is accrued on the notes payable. Supplies on hand total $590. Insurance expires at the rate of $800 per month. 4. 5. 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. (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	March 31	Depreciation expense	$1200
		Accumulated depreciation- Equipment		$1200
		( depreciation expenses recorded)
2	March 31	Unearned rent revenue	$4200
		Rent revenue		$4200
		( unearned rent revenue recorded )
3	March 31	Interest expense	$575
		Interest payable		$575
		(Interest expense recorded)
4	March 31	Supplies expense	$2310
		Supplies		$2310
		(Supplies expense recorded)
5	March 31	Insurance expense	$2400
		Prepaid insurance		$2400
		( To record insurance expense)

Depreciation expense for 3 months = Depreciation expense per month x 3

= $400 * 3 = $1200

Rent revenue earned = Unearned rent revenue x 1/3

= 12600 x 1/3 = $4200

Supplies expense = Supplies beginning - Supplies ending

= $2900 - $590 = $ 2310

Insurance expense for 3 months = Insurance expense per month x 3

= $800 * 3 =$2400

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