Question

The ledger of Cheyenne Corp. on March 31 of the current year includes the selected accounts, shown below, before quarterly adjusting entries have been prepared.

		Debit		Credit
Prepaid Insurance		$ 3,600
Supplies		3,200
Equipment		31,250
Accumulated Depreciation—Equipment				$ 8,600
Notes Payable				23,000
Unearned Rent Revenue				12,000
Rent Revenue				62,000
Interest Expense		0
Salaries and Wages Expense		13,000

An analysis of the accounts shows the following.

1.		The equipment depreciates $500 per month.
2.		One-third of the unearned rent revenue was earned during the quarter.
3.		Interest totaling $575 is accrued on the notes payable for the quarter.
4.		Supplies on hand total $500.
5.		Insurance expires at the rate of $200 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. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

The adjusting entries at March 31, assuming that adjusting entries are made quarterly are as follows:

Date	Account and Explanation	Debit ($)	Credit ($)
March 31	Depreciation expense ($500 * 3)	1,500
	Accumulated depreciation		1,500
	(Recorded the depreciation expense)
March 31	Unearned rent revenue ($12,000 *2/3)	8,000
	Rent revenue		8,000
	(Recorded the unearned rent revenue)
March 31	Interest expense	575
	Interest payable		575
	(Recorded the interest expenses)
March 31	Supplies expense ($3,200 - $500)	2,700
	Supplies		2,700
	(Recorded the supplies expenses)
March 31	Insurance expense ($200 *3 )	600
	Prepaid insurance		600
	(Recorded the prepaid insurance)