Question

The ledger of Cheyenne Corp. on March 31 of the current year includes the selected accounts below before adjusting entries have been prepared. Debit Credit Supplies $1,500 Prepaid Insurance 1,800 Equipment 12,500 Accumulated Depreciation-Equipment $4,200 Notes Payable 10,000 Unearned Rent Revenue 6,200 30,000 Rent Revenue Interest Expense Salaries and Wages Expense 7,000 An analysis of the accounts shows the following. 1. The equipment depreciates $140 per month. 2. Half of the unearned rent revenue was earned during the quarter. 3. Interest of $200 is accrued on the notes payable. 4. Supplies on hand total $425. 5. Insurance expires at the rate of $200 per month.

Answer 1

Journal

Date	Account title	Debit	Credit
March 31	Depreciation expense	420
	Accumulated depreciation - Equipment		420
March 31	Unearned rent revenue	3,100
	Rent revenue		3,100
March 31	Interest expense	200
	Interest payable		200
March 31	Supplies expense	1,075
	Supplies		1,075
March 31	Insurance expense	600
	Prepaid insurance		600

i) Depreciation per month on equipment = $140

Hence, quarterly depreciation expense = 140 x 3

= $420

ii) Rent revenue earned = 6,200 x 1/2

= $3,100

iii) Supplies expense = Supplies beginning - Supplies ending

= 1,500 - 425

= $1,075

iv) Monthly insurance expense = $200

Quarterly insurance expense = $200 x 3

= $600

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