On March 31, 2012 Easy Rentals Trial Balance is as follows:

Debit Credit

Cash $12,200

Prepaid Insurance $14,400

Supplies $2,800

Equipment $21,600

Accumulated Depreciation $5,400

Unearned Revenue $9,600

Loan Payable $20,000

Rent Revenue $30,000

Salaries Expense $14,000

$65,000 $65,000

The company closes their books monthly. An analysis of the accounts showed the following:

1. The equipment, purchased on January 1, 2011 is estimated to have a useful life of 4 years
2. Two thirds of the unearned revenue is earned by the end of the month
3. The loan payable has an interest rate of 6% which is paid monthly at the beginning of each month
4. Supplies on hand totaled $850 on March 31.
5. The one year life insurance policy was purchased on March 1 for $14,400
6. Income tax is estimated to be $2,200 for the month

Instructions

1. Set up the T accounts and enter the beginning balances in the general ledger. (5 marks)
2. Prepare the adjusting entries (5 marks)
3. Post to T accounts and do an adjusted trial balance (5 marks)