The ledger of Chopin Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.
Prepaid Insurance $3,600
Notes Payable 20,000
Unearned Rent Revenue 6,300
Rent Revenue 60,000
Interest Expense -0-
Wage Expense 14,000
An analysis of the accounts shows the following.
1. The equipment depreciates $250 per month.
2. One-third of the unearned rent was earned during the quarter.
3. Interest of $500 is accrued on the notes payable.
4. Supplies on hand total $650.
5. Insurance expires at the rate of $300 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.
Description/Account Debit Credit
1. Interest ExpenseInterest PayableSupplies ExpensePrepaid InsuranceDepreciation ExpenseSuppliesInsurance ExpenseAccumulated Depreciation-EquipmentUnearned Rent RevenueRent Revenue
Supplies ExpenseInterest ExpenseSuppliesInsurance ExpenseUnearned Rent RevenuePrepaid InsuranceAccumulated Depreciation-EquipmentDepreciation ExpenseRent RevenueInterest Payable
2. Rent RevenueInsurance ExpenseDepreciation ExpensePrepaid InsuranceUnearned Rent RevenueAccumulated Depreciation-EquipmentInterest ExpenseInterest PayableSupplies ExpenseSupplies
Accumulated Depreciation-EquipmentInterest PayableUnearned Rent RevenueInterest ExpenseSupplies ExpenseInsurance ExpenseSuppliesPrepaid InsuranceRent RevenueDepreciation Expense
3. Rent RevenueInterest ExpenseDepreciation ExpenseSuppliesAccumulated Depreciation-EquipmentInterest PayableInsurance ExpenseSupplies ExpensePrepaid InsuranceUnearned Rent Revenue
Unearned Rent RevenueRent RevenueInterest PayableDepreciation ExpenseSupplies ExpenseAccumulated Depreciation-EquipmentInterest ExpenseSuppliesInsurance ExpensePrepaid Insurance
4. Supplies ExpensePrepaid InsuranceAccumulated Depreciation-EquipmentInsurance ExpenseDepreciation ExpenseUnearned Rent RevenueRent RevenueInterest ExpenseInterest PayableSupplies
Interest ExpenseRent RevenueInterest PayableSupplies ExpenseInsurance ExpensePrepaid InsuranceAccumulated Depreciation-EquipmentUnearned Rent RevenueSuppliesDepreciation Expense
5. Accumulated Depreciation-EquipmentSupplies ExpensePrepaid InsuranceSuppliesInsurance ExpenseInterest PayableDepreciation ExpenseUnearned Rent RevenueRent RevenueInterest Expense
Unearned Rent RevenueRent RevenueSupplies ExpenseInterest ExpensePrepaid InsuranceSuppliesInterest PayableDepreciation ExpenseInsurance ExpenseAccumulated Depreciation-Equipment