The ledger of Beckett Rental Agency on March 31 of the current year includes the selected accounts below before adjusting entries have been prepared.

Debit Credit

Supplies $ 3,000

Prepaid Insurance 3,600

Equipment 25,000

Accumulated Depreciation-Equipment $ 8,400

Notes Payable 20,000

Unearned Rent Revenue 12,400

Rent Revenue 60,000

Interest Expense 0

Salaries and Wages Expense 14,000

An analysis of the accounts shows the following.

1. The equipment depreciates $280 per month.

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

3. Interest of $400 is accrued on the notes payable.

4. Supplies on hand total $850.

5. Insurance expires at the rate of $400 per month.

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly.

Question

Marcelo Lewis

Business

23 July, 07:39

The ledger of Beckett Rental Agency on March 31 of the current year includes the selected accounts below before adjusting entries have been prepared.

Debit Credit

Supplies $ 3,000

Prepaid Insurance 3,600

Equipment 25,000

Accumulated Depreciation-Equipment $ 8,400

Notes Payable 20,000

Unearned Rent Revenue 12,400

Rent Revenue 60,000

Interest Expense 0

Salaries and Wages Expense 14,000

An analysis of the accounts shows the following.

1. The equipment depreciates $280 per month.

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

3. Interest of $400 is accrued on the notes payable.

4. Supplies on hand total $850.

5. Insurance expires at the rate of $400 per month.

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly.

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Answers (1)

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Simeon Hutchinson · Answer 1

The adjusting journal entries are shown below:

1. Depreciation Expense A/c Dr $ 840 ($280 * 3 months for one quarter)

To Accumulated Depreciation - Equipment A/c $840

(Being depreciation expense is recorded)

2. Unearned Rent Revenue A/c Dr $6,200 ($12,400 : 2)

To Rent Revenue A/c. $6,200

(Being half rent revenue earned is recorded)

3. Interest Expense A/c Dr $400

To Accrued Interest A/c $400

(Being accrued interest is recorded)

4. Supplies Expense A/c $2,150

To Supplies A/c $2,150

(Being the supplies expense is recorded)

The supplies expense is computed below

= Supplies balance - supplies on hand

= $3,000 - $850

= $2,150

5. Insurance Expense A/c Dr $1,200 ($400 * 3 months in one quarter)

To Prepaid Insurance A/c $1,200

(Being the insurance expense is recorded)