The ledger of Chopin Rental Agency on March 31 of the current year includes the

Question

The ledger of Chopin Rental Agency on March 31 of the current year includes the following
selected accounts before adjusting entries have been prepared.
Debit
Prepaid Insurance $ 4,070
Supplies 2,610
Equipment 33,160

Credit
Accumulated
Depreciation Equipment $ 9,070
Notes Payable 24,660
Unearned Rent 6,600
Rent Revenue 69,750
Interest Expense -0-
Wages Expense 19,030

An analysis of the accounts shows the following.
1. The equipment depreciates $260 per month.
2. One-third of the unearned rent was earned during the quarter.
3. Interest of $500 is accrued on the notes payable.
4. Supplies on hand total $890.
5. Insurance expires at the rate of $380 per month.

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly.

Explanation / Answer

Hi,

Please find the answer as follows:

1)

Mar.31
Depreciation Expense Dr (260*3) 780
Accumulated Depreciation-Equipment Cr 780

2)

Mar.31
Unearned Rent Dr (6600/3) 2200
Rent Revenue Cr 2200

3)

Mar.31
Interest Expense Dr 500
Interest Payable Cr 500

4)

Mar.31
Supplies Expense Dr (2610 - 890) 1720
Supplies Cr 1720

5)

Mar.31
Insurance Expense Dr (380*3) 1140
Prepaid Insurance Cr 1140

Thanks.

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