Question

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

Answer 1

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.