Question

(Chapter 3 LO3)

The ledger of Pina Colada 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		$ 1,800
Supplies		3,400
Equipment		18,750
Accumulated Depreciation—Equipment				$ 8,600
Notes Payable				21,000
Unearned Rent Revenue				9,900
Rent Revenue				61,000
Interest Expense		0
Salaries and Wages Expense		11,000

An analysis of the accounts shows the following.

The equipment depreciates $300 per month.
2.		One-third of the unearned rent revenue was earned during the quarter.
3.		Interest totaling $525 is accrued on the notes payable for the quarter.
4.		Supplies on hand total $570.
5.		Insurance expires at the rate of $100 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.

Answer 1

		Debit	Credit
March 31	Depreciation Expense	900		=300*3
	Accumulated Depreciation-Equipment		900
March 31	Unearned Rent Revenue	3300		=9900*1/3
	Rent Revenue		3300
March 31	Interest Expense	525
	Interest Payable		525
March 31	Supplies Expense	2830		=3400-570
	Supplies		2830
March 31	Insurance Expense	300		=100*3
	Prepaid Insurance		300