1.prepare quarterly adjusting entries required at March 31st Debit Credit insura

Question

1.prepare quarterly adjusting entries required at March 31st Debit Credit insurance 15.240 2,890 22,200 Supplies Equipment Accumulated depreciation-equipment Unearned revenue Loan payable, due 2020 Rent revenue Salaries expense $ 5,800 9,640 20,300 30,300 14,400 An analysis of the accounts shows the following 1. The equipment, which was purchased on January 1,2017, is estimated to have a useful life of four years. The company uses straight-line depreclatiorn 2. One third of the unearned revenue related to rent is still unearned at the end of the quarter. The loan payable has an interest rate of 6% interest is paid on the first day of each following month and was last paid March 1, 2018. 4. Supplies on hand total $870 at March 31. 5. The one-year insurance policy was purchased for $ 15,240 on January 1. 6. Income tax is estimated to be $ 2,800 for the quarter

Explanation / Answer

Solution:

Journal Entries Event Particulars Debit Credit 1 Depreciation expense Dr ($22,200/4*3/12) $1,388.00        To Accumulated depreciation - Equipment $1,388.00 (To record depreciation on equipment) 2 Unearned revenue Dr $6,427.00        To Rent revenue ($9,640*2/3) $6,427.00 (To record rent revenue earned) 3 Interest expense Dr $102.00        To Interest payable ($20,300*6%*1/12) $102.00 (To record interest on loan) 4 Supplies Expense Dr ($2,890 - $870) $2,020.00        To Supplies $2,020.00 (To record supplies used) 5 Insurance Expense Dr $3,810.00        To Prepaid insurance ($15,240 * 3/12) $3,810.00 (To record insurance expired) 6 Income tax expense Dr $2,800.00        To Income tax payable $2,800.00 (To record income tax for the quarter)

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