Supplies The ledger of Howard Rental Agency on March of the current year 31 incl

Question

Supplies

The ledger of Howard Rental Agency on March of the current year 31 includes the selected accounts above before adjusting entries have been prepared.

An analysis of the accounts shows the following:

1) the equipment depreciates $280 per month

2) Half of the unearned rent revenue was earned during the quarter

3) interest of $400 is accrued on the notes payable.

4) supplies on hand total $850

5) insurance expires at the rate of $400 per month

instructions:

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.

Supplies

$3,000 (debit) Prepaid nsurance 3,600 (debit) Equipment 25,000 (debit) Accumulated Depreciation- Equipment $8,400 (credit) Notes Payable 20,000 (credit) Unearned Rent Revenue 12,400 (credit) Interest expense 0 (debit) Rent Revenue 60,000 (credit) Salaries And Wages Expense 14,000 (debit)

Explanation / Answer

ADJUSTING ENTRY:

Date accounts & explanation debit credit 1) Depreciation expenses 840      Accumlated depreciation a/c 840 (To record depreciation expenses) 2) Unearned revenue 6200         Rent Revenue a/c 6200 (To record rent revenue) 3) Interest expenses a/c 400      Interest payable a/c 400 (To record accured interest) 4) Supplies expenses a/c 2150      Supplies a/c 2150 (To record supplies adjusted) 5) Insurance expenses a/c 1200      Prepaid insurance a/c 1200 (To record insurance expired)

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