E3-5B (Adjusting Entries) The ledger of Chan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.
Prepaid Insurance $ 2,700
Accumulated Depreciation—Equipment $ 6,300
Notes Payable 15,000
Unearned Rent Revenue 6,975
Rent Revenue 45,000
Interest Expense –0–
Salaries and Wage Expense 10,500
An analysis of the accounts shows the following.
1. The equipment depreciates $188 per month.
2. One-third of the unearned rent was recognised as revenue during the quarter.
3. Interest of $375 is accrued on the notes payable.
4. Supplies on hand total $637.
5. Insurance expires at the rate of $225 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.