E4-9

Prepare adjusting entries from selected account data.

The ledger of Howard Rental Agency on March 31 of the current year includes the selected accounts below before adjusting entries have been prepared.

	Debit	Credit
Supplies	$3,000
Prepaid Insurance	3,600
Equipment	25,000
Accumulated DepreciationEquipment		$8,400
Notes Payable		20,000
Unearned Rent Revenue		12,400
Rent Revenue		60,000
Interest Expense	0
Salaries and Wages Expense	14,000

An analysis of the accounts shows the following.

1.The equipment depreciates $280 per month.

2.Half of the unearned rent revenue was earned during the quarter.

3.Interest of $400 is accrued on the notes payable.

4.Supplies on hand total $850.

5.Insurance expires at the rate of $400 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.