The ledger of Duggan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. Debit CreditPrepaid Insurance $4,020 Supplies 2,620 Equipment 28,270 Accumulated Depreciation-Equipment $8,580 Notes Payable 24,980 Unearned Rent Revenue 7,800 Rent Revenue 60,880 Interest Expense –0– Salaries and Wages Expense 22,050 An analysis of the accounts shows the following.1. The equipment depreciates $290 per month.2. One-third of the unearned rent was earned during the quarter.3. Interest of $680 is accrued on the notes payable.4. Supplies on hand total $850.5. Insurance expires at the rate of $370 per month.Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

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andromache andromache · Answer 1 · 2020-02-07T11:14:28+01:00

Answer:

Explanation:

The adjusting entries are shown below:

1. Depreciation Expense A/c Dr $870 ($290 × 3 months)

To Accumulated Depreciation - Equipment A/c $870

(Being depreciation expense is recorded)

2. Unearned rent A/c Dr $2,600 ($7,800 ÷ 3)

To Rent revenue A/c $2,600

(Being the unearned rent is recorded)

3. Interest expense A/c Dr $680

To Accrued Interest A/c $680

(Being the interest expense is recorded)

4. Supplies expense A/c Dr $442.50

To Supplies A/c $442.50

(Being the supplies expense is recorded)

The computation is shown below:

= (Supplies balance - supplies on hand) ÷ (total number of quarters in a year)

= ($2,620 - $850) ÷ 4

= $442.50

5. Insurance expense A/c Dr $1,110 ($370 × 3 months)

To Prepaid insurance A/c $1,110

(Being the insurance expense is recorded)