Question

Exercise 3-05

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

An analysis of the accounts shows the following.

Debit

Credit

Prepaid Insurance

$3,828

Supplies

2,783

Equipment

26,790

Accumulated Depreciation-Equipment

$7,940

Notes Payable

21,410

Unearned Rent Revenue

4,770

Rent Revenue

59,170

Interest Expense

–0–

Salaries and Wages Expense

13,840

1.		The equipment depreciates $246 per month.
2.		One-third of the unearned rent was recognized as revenue during the quarter.
3.		Interest of $510 is accrued on the notes payable.
4.		Supplies on hand total $616.
5.		Insurance expires at the rate of $319 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 Expenses. (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.)

No.	Account Titles and Explanation	Debit	Credit
1.	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
2.	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
3.	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
4.	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
5.	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

Answer 1

Solution:

Adjusting Journal Entries
Date	Particulars	Debit	Credit
1)	Depreciation expense Dr ($246*3)	$738
	To Accumulated Depreciation		$738
2)	Unearned Rent Revenue Dr ($4770/3)	$1,590
	To Rent Revenue		$1,590
3)	Interest expense Dr	$510
	To Interest Payable		$510
4)	Supplies expense Dr ($2783 - $616)	$2,167
	To Supplies		$2,167
5)	Insurance Expense Dr ($319*3)	$957
	To Prepaid Insurance		$957