Problem
The ledger of Perez Rental Agency on March 31 of the current year includes the selected accounts, shown below, before quarterly adjusting entries have been prepared.
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Debit
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Credit
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Prepaid Insurance
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$ 12,600
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|
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Supplies
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2,700
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|
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Equipment
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25,000
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|
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Accumulated Depreciation-Equipment
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$ 8,400
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Notes Payable
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24,000
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Unearned Rent Revenue
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10,700
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Rent Revenue
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58,000
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Interest Expense
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0
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|
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Salaries and Wages Expense
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11,000
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An analysis of the accounts shows the following.
1. The equipment depreciates $400 per month.
2. One-third of the unearned rent revenue was earned during the quarter.
3. Interest totaling $600 is accrued on the notes payable for the quarter.
4. Supplies on hand total $880.
5. Insurance expires at the rate of $700 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 Expense.