In: Accounting
E4-9
Prepare adjusting entries from selected account data.
The ledger of Howard Rental Agency on March 31 of the current year includes the selected accounts below before adjusting entries have been prepared.
Debit |
Credit |
|
---|---|---|
Supplies |
$ 3,000 |
|
Prepaid Insurance |
3,600 |
|
Equipment |
25,000 |
|
Accumulated Depreciation—Equipment |
$ 8,400 |
|
Notes Payable |
20,000 |
|
Unearned Rent Revenue |
12,400 |
|
Rent Revenue |
60,000 |
|
Interest Expense |
0 |
|
Salaries and Wages Expense |
14,000 |
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.
Adjusting entry :
No | Account and explanation | debit | credit |
1 | Depreciation expense (280*3) | 840 | |
Accumlated depreciation-equipment | 840 | ||
(To record depreciation) | |||
2 | Unearned rent revenue (12400/2) | 6200 | |
Rent revenue | 6200 | ||
(To record rent revenue) | |||
3 | Interest expense | 400 | |
Interest payable | 400 | ||
(To record accured interest) | |||
4 | Supplies expense (3000-850) | 2150 | |
Supplies | 2150 | ||
(To record supplies adjusted) | |||
5 | Insurance expense (400*3) | 1200 | |
Prepaid insurance | 1200 | ||
(To record insurance expense) |