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    Adjusting Entries for Account Data

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    Prepare adjusting entries from selected account data.

    The ledger of Welch Rental Agency Inc. on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.
    Debit Credit
    Prepaid Insurance $3,600
    Supplies 2,800
    Equipment 25,000
    Depreciation-Equipment $ 8,400
    Notes Payable 20,000
    Unearned rent 12,000
    Rent revenue 60,000
    Interest expense -0-
    Wages expense 14,000

    An analysis of the accounts shows the following.
    1) The equipment depreciates $300 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 $1,100.
    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.

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    Solution Preview

    31 Depreciation expense 900
    Accumulated Depreciation 900

    31 Unearned rent 4000
    Rent 4000

    31 Interest Payble 500

    Solution Summary

    This solution involves adjusting entries for account data.