The ledger of Passehl Rental Agency on March 31 of the current year includes the

Question

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. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Debit

Credit

Prepaid Insurance $ 14,400 Supplies 3,000 Equipment 31,250 Accumulated Depreciation—Equipment $ 8,800 Notes Payable 22,000 Unearned Rent Revenue 10,800 Rent Revenue 60,000 Interest Expense 0 Salaries and Wages Expense 12,000

Explanation / Answer

No. Account Titles and Explanation Debit Credit 1 Depreciation expense ($500 x 3 months) 1500 Accumulated depreciation-equipment 1500 (To record depreciation expense) 2 Unearned rent revenue 3600 Rent revenue ($10800 x 1/3) 3600 (To record rent revenue earned) 3 Interest expense 550 Interest payable 550 (To record interest accrued on note payable) 4 Supplies expense ($3000 - $720) 2280 Supplies 2280 (To record supplies expense) 5 Insurance expense ($800 x 3 months) 2400 Prepaid insurance 2400 (To record insurance expense)

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