Question 2 The ledger of Metlock, Inc. on March 31 of the current year includes the selected accounts below before adjusting entries have been prepared. Debit Credit Supplies $3,900 Prepaid Insurance 4,680 Equipment 32,500 Accumulated Depreciation—Equipment $10,920 Notes Payable 26,000 Unearned Rent Revenue 16,120 Rent Revenue 78,000 Interest Expense 0 Salaries and Wages Expense 18,200 An analysis of the accounts shows the following. 1. The equipment depreciates $364 per month. 2. Half of the unearned rent revenue was earned during the quarter. 3. Interest of $520 is accrued on the notes payable. 4. Supplies on hand total $1,105. 5. Insurance expires at the rate of $520 per month. Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly

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akiran007 akiran007 · Answer 1 · 2020-04-24T05:22:13+02:00

Answer:

The ledger of Metlock, Inc.

March 31 Adjusting Entries

Sr. No Particulars Debit Credit

1 Depreciation Expense $1092

Accumulated Depreciation $ 1092

Depreciation for 3 months = $364*3= $ 1092

2. Unearned Rent Revenue 8060

Rent Revenue Earned 8060

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

3. Interest Expense $130

Interest Payable $ 130

Interest of $520 is accrued on the notes payable. For the quarter it will be

$ 520/4-=$ 130

4. Supplies Expense 2885

Supplies 2885

Supplies on hand total $1,105. Supplies were $ 3900. The amount of supplies used were $ 3900- $ 1015= $ 2885

5. Insurance Expense $1560

Prepaid Insurance $ 1560

Insurance expires at the rate of $520 per month. For the three months it would be $ 520* 3= $1560.