Question

The ledger of Nash Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. Debit Credit Prepaid Insurance $3,492 Supplies 2,593 Equipment 25,040 Accumulated Depreciation-Equipment $7,743 Notes Payable 20,290 Unearned Rent Revenue 4,080 Rent Revenue 61,870 Interest Expense –0– Salaries and Wages Expense 15,040An analysis of the accounts shows the following. 1. The equipment depreciates $616 per month. 2. Half of the unearned rent revenue was earned during the quarter. 3. Interest of $880 is accrued on the notes payable. 4. Supplies on hand total $1,870. 5. Insurance expires at the rate of $880 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 Expenses.

Answer 1

Answer:

Nash Rental Agency

The Journal General

Adjusting Entries

March 31

1. Depreciation Expense        $ 1848 Dr.

 Accumulated Depreciation   $ 1848 Cr.

1. The equipment depreciates $616 per month. $616 * 3=  $ 1848

   

Unearned Revenue      $ 2040

Revenue Earned               $ 2040

2. Half of the unearned rent revenue was earned during the quarter.

= 4080/2= $ 2040

3. Interest Expense  $220 Dr.

Interest Payable $ 220 Cr.

3. Interest of $880 is accrued on the notes payable.

Interest Payable $ 880/12 *3= $ 220

4. Supplies Expense $ 723  Dr.

Supplies  Account        $ 723 Cr.

4. Supplies on hand total $1,870. $ 2593- $ 1870= $ 723 Supplies were used.

5. Insurance Expenses   $ 2460 Dr.

Prepaid Insurance    $ 2460 Cr.

5. Insurance expires at the rate of $880 per month.

Insurance Expense $880*3= $2460 for the quarter