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(Adjusting Entries) The ledger of Duggan 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-
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.

Instructions
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.

#### Solution Preview

Before preparing the adjusting entries, it will be good to work through points 1 – 5.
1. Depreciation \$250 per month = Depreciation Expense \$250 x 3 = \$750 per quarter
2. 1/3 unearned rent is earned = Rent Revenue = 1/3 x \$9300 = \$3100
3. Interest Expense = \$500
4. Supplies Expense = \$2800 ...