Instruction Prepare a correct trial balance. (Note: It may be necessary to add o
ID: 2332302 • Letter: I
Question
Instruction Prepare a correct trial balance. (Note: It may be necessary to add one or more accounts to the trial balance.) E3-5 (L03) EXCEL (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 $3,600 2,800 25,000 Credit Prepaid Insurance Supplies Equipment Accumulated Depreciation- Equipment Notes Payable Unearned Rent Revenue Rent Revenue $8,400 20,000 9,300 60,000 Interest Expense Salaries and Wages 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 recognized as revenue 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.Explanation / Answer
Trial Balance Balance Account Title Debit Credit Prepaid insurance( $ 3600 - $ 3,600) $ - Supplies ($ 2,800 - $ 1950) $ 850 Equipment $ 25,000 Accumulated Depreciation - Equipment $ 11,400 Note Payable $ 20,000 Unearned Rent Revenue $ 6,200 Rent Revenue $ 63,100 Interest Expenses $ 500 Interest Payable $ 500 Salary and Wages Expenses $ 14,000 Depreciation $ 3,000 Supplies Expenses $ 1,950 Insurance Expenses $ 3,600 Total $ 48,900 $ 1,01,200 ADJUSTMENTS: 1 Depreciation: Add: Depreciation Account $ 3,000 Add: Accumulation Dereciation ($ 250 X 12) = $ 3,000 2 Revenue Recongnized 1/3 1/3 of unearned Revenue = $ 9,300 /3 = $ 3,100 Unearned Rent Revenue ($ 9,300 - $3100) $ 6,200 Rent Revenue ($ 60,000 + $ 3,100) $ 63,100 3 Interest Payable of $ 500 Interest Expenses = $ 500 Interest Payable $ 500 4 Supplies Expense: Supplies := $ 2,800 Less: Supplies on hand $ 850 Supplies Expense = $ 1,950 5 Insurance Expenses Prepaid insurance = $ 3,600 Less: Insurance Expires ($ 300 X 12 months) $ 3,600 Prepaid insurance Balane $ -