Exercise 3-07 (Video)

The ledger of Sheridan 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		$ 7,200
Supplies		3,300
Equipment		31,250
Accumulated DepreciationEquipment				$ 8,100
Notes Payable				24,000
Unearned Rent Revenue				9,900
Rent Revenue				58,000
Interest Expense		0
Salaries and Wages Expense		11,000

An analysis of the accounts shows the following.

1.		The equipment depreciates $500 per month.
2.		One-third of the unearned rent revenue was earned during the quarter.
3.		Interest of $600 is accrued on the notes payable.
4.		Supplies on hand total $730.
5.		Insurance expires at the rate of $400 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.