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Dugan Rental Agency: Preparing Adjusting Entries

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The ledger of Dugan Rental Agency 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
Accumulated Depreciation-Equipment $8,400
Notes Payable 20,000
Unearned Rent Revenue 9,300
Rent Revenue 60,000
Interest Expense 0.00
Wage Expense 14,000

An analysis of the accounts shows the following.
1. The equipment depreciates $250 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 $850
5. Insurance expires at the rate of $300 per month

Prepare adjusting entries at March 31, assuming entries are made quarterly. Additional accounts are: Depreciation Expense; Insurance Expense; Interest Payable; and Supplies Expense.

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Solution Summary

The solution assists preparing adjusting entries for the Dugan Rental Agency.

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1.

Dr Depreciation expense $750
Cr Accumulated depreciation - Equipment ...

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