E3-5b (adjusting entries) the ledger of chan rental agency on march

E3-5B (Adjusting Entries) The ledger of Chan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.

                                                                                     Debit                         Credit

Prepaid Insurance                                                 $ 2,700

Supplies                                                                     2,100

Equipment                                                               18,750

Accumulated Depreciation—Equipment                                              $ 6,300

Notes Payable                                                                                             15,000

Unearned Rent Revenue                                                                            6,975

Rent Revenue                                                                                              45,000

Interest Expense                                                         –0–

Salaries and Wage Expense                               10,500

 

An analysis of the accounts shows the following.

1. The equipment depreciates $188 per month.

2. One-third of the unearned rent was recognised as revenue during the quarter.

3. Interest of $375 is accrued on the notes payable.

4. Supplies on hand total $637.

5. Insurance expires at the rate of $225 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.

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