Exercise 3-5 Verne Cova Company has the following balances in selected accounts on December 31, 2019. Accounts Receivable Accumulated Depreciation-Equipment 7,000 Equipment Interest Payable Notes Payable 10,000 Prepaid Insurance 2,100 Salaries and Wages Payable Supplies 2,450 Unearned Service Revenue 30,000 All the accounts have normal balances. The information below has been gathered at December 31, 2019. Verne Cova Company borrowed $10,000 by signing a 12%, one-year note on September 1, 2019. 1. A count of supplies on December 31, 2019, indicates that supplies of $900 are on hand. 2. Depreciation on the equipment for 2019 is $1,000. 3. Verne Cova Company paid $2,100 for 12 months of insurance coverage on June 1, 2019. 4. On December 1, 2019, Verne Cova Company collected $30,000 for consulting services to be performed from December 1, 2019, through March 31, 2020. Verne Cova Company performed consulting services for a client in December 2019. The client will be billed $4,200. 5. 6. Verne Cova Company pays its employees total salaries of $9,000 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2019. 7. Prepare adjusting entries for the seven items described above. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Exercise 3-7 The ledger of Perez Rental Agency on March 31 of the current year includes the selected accounts, shown below, before quarterly adjusting entries have been prepared. Debit Credit $ 3,600 Prepaid Insurance Supplies 2,800 25,000 Equipment Accumulated Depreciation-Equipment $ 8,400 Notes Payable 20,000 Unearned Rent Revenue 10,200 Rent Revenue 60,000 Interest Expense Salaries and Wages Expense 14,000 An analysis of the accounts shows the following. The equipment depreciates $400 per month. 1. One-third of the unearned rent revenue was earned during the quarter. 2. Interest totaling $500 is accrued on the notes payable for the quarter. 3. 4. Supplies on hand total $900. Insurance expires at the rate of $200 per month. 5. 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. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Credit Debit No. Date Account Titles Mar. 31