NEED ANSWER ASAP PLEASE !! Question 3 The ledger of Passehl Rental Agency on Mar
ID: 2395842 • Letter: N
Question
NEED ANSWER ASAP PLEASE !! Question 3
The ledger of Passehl Rental Agency on March 31 of the current year includes the selected accounts, shown below, before adjusting entries have been prepared.
Debit
Credit
An analysis of the accounts shows the following.
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.
Debit
Credit
Prepaid Insurance $ 12,600 Supplies 2,700 Equipment 31,250 Accumulated Depreciation—Equipment $ 8,000 Notes Payable 21,000 Unearned Rent Revenue 9,600 Rent Revenue 61,000 Interest Expense 0 Salaries and Wages Expense 13,000Explanation / Answer
Adjusting entries at March 31: No. Date Account titles and explanation Debit Credit 1) Mar. 31 Depreciation Expense $ 1,500 Accumulated Depreciation-Equipment $ 1,500 (To record depreciation expense for 3 months ended march 31) 2) Mar. 31 Unearned Rent Revenue $ 3,200 Rent Revenue $ 3,200 (To record rent revenue earned) 3) Mar. 31 Interest expense $ 525 Interest Payable $ 525 (To record interest expense for 3 months) 4) Mar. 31 Supplies Expense $ 2,110 Supplies $ 2,110 (To record supplies expense) 5) Mar. 31 Insurance Expense $ 2,100 Prepaid Insurance $ 2,100 (To record insurance expense for 3 months) Working: 1) Depreciation expense for 3 months = $ 500 x 3 = $ 1,500 2) One third of unearned rent revenue = $ 9,600 x 1/3 = $ 3,200 3) Interest expense $ 525 4) Supplies before adjsutment $ 2,700 Less supplies after adjustment $ 590 Supplies Expense $ 2,110 5) Insurance expense for 3 months = $ 700 x 3 = $ 2,100
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