E3-7 The ledger of Passehl Rental Agency on March 31 of the current year includes the selected accounts, shown below, 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 10,200

Rent Revenue 60,000

Interest Expense 0

Salaries and Wages Expense 14,000

An analysis of the accounts shows the following.

The equipment depreciates $400 per month.

One-third of the unearned rent revenue was earned during the quarter.

Interest of $500 is accrued on the notes payable.

Supplies on hand total $750.

Insurance expires at the rate of $300 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.

Prepare adjusting entries.