Confused About Adjusting Entries
Asked Aug 31, 2009, 09:31 AM
I am not sure if you can help me. I am confused when it comes to adjusting entries. The problem below was given as homework, can you tell me if I have done this correctly and if not where did I go wrong? My answer is at the bottom... thanks!
E3-7 The ledger of Piper Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.
Prepaid Insurance $3,600
Notes Payable 20,000
Unearned Rent 9,900
Rent Revenue 60,000
Interest Expense –0–
Wages Expense 14,000
An analysis of the accounts shows the following.
1. The equipment depreciates $400 per month.
2. One-third of the unearned rent was earned during the quarter.
3. Interest of $500 is accrued on the notes payable.
4. Supplies on hand total $700.
5. Insurance expires at the rate of $200 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.
GENERAL JOURNAL J1
Date Account Title & Explanation Debit Credit
2008 Adjusting Entries
Mar. 31 Insurance Expense 600
31 Prepaid Insurance 600
(to record insurance expired quarterly)
31 Supplies Expense 2,100
31 Supplies 2,100
(to record supplies used)
31 Depreciation Expense 1,200
31 Accumulated Depreciation Expense - Equipment 1,200
(to record quarterly depreciation)
31 Unearned Rent 3,300
31 Rent Revenue 3,300
(to record quarterly revenue for rent provided)
31 Interest Expense 500
31 Interest Payable 500
(to record quarterly accrued interest on notes payable)