The ledger of pina colada corp. on march 31 of the current year includes the selected accounts below before adjusting entries have been prepared. debit credit supplies $3,600 prepaid insurance 4,320 equipment 30,000 accumulated depreciation—equipment $10,080 notes payable 24,000 unearned rent revenue 14,880 rent revenue 72,000 interest expense 0 salaries and wages expense 16,800 an analysis of the accounts shows the following. 1. the equipment depreciates $336 per month. 2. half of the unearned rent revenue was earned during the quarter. 3. interest of $480 is accrued on the notes payable. 4. supplies on hand total $1,020. 5. insurance expires at the rate of $480 per month. prepare the adjusting entries at march 31, assuming that adjusting entries are made quarterly.

Explanation:

The adjusting entries are shown below:

1. Depreciation Expense A/c Dr $1,008 ($336 × 3 month)

       To Accumulated Depreciation A/c

(Being depreciation expense is adjusted)

As quarter includes 3 months so we multiply it with the depreciation expense.

2. Unearned rent revenue A/c Dr $7,440

          To Rent revenue                                  $7,440

(Being unearned rent revenue is adjusted)

3. Interest expense A/c Dr $490

      To Accrued interest payable A/c  $490

(Being accrued interest is recorded on the notes payable)

4. Supplies Expense A/c Dr $2,575 ($3,600 - $1,020)

         To Office supplies                     $2,575

(Being supplies are adjusted)

5. Insurance expense A/c Dr $1,440 ($480 × 3 month)

         To Prepaid insurance A/c             $1,440

(Being prepaid insurance is adjusted)