Adjusting Entries

The ledger of Duggan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.

Debit

Credit

Prepaid Insurance

$3,600

Supplies

2,800

Equipment

25,000

Accumulated DepreciationEquipment

$8,400

Notes Payable

20,000

Unearned Rent Revenue

8,400

Rent Revenue

60,000

Interest Expense

-

Salaries and Wages Expense

14,000

An analysis of the accounts shows the following.

1. The equipment has no salvage value and the annual depreciate rate is

20% under straightline method.

2. One-fourth of the unearned rent was recognized as revenue during the quarter.

3. Interest on notes payable is accrued, the annual rate is 10%.

4. Supplies on hand total $950.

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. (Omit explanations.)

Debit

Credit

1

2

3

4

5