Problem
On March 31, 2015, Easy Rental Agency Inc.'s trial balance included the following unadjusted account balances. The company's year end is December 31 and it adjusts its accounts quarterly.
|
Prepaid insurance
|
$14,400
|
|
|
Supplies
|
2,800
|
|
|
Equipment
|
21,600
|
|
|
Accumulated depreciation-equipment
|
|
$ 5,400
|
|
Unearned revenue
|
|
9,600
|
|
Loan payable
|
|
20,000
|
|
Rent revenue
|
|
30,000
|
|
Salaries expense
|
14,000
|
|
An analysis of the accounts shows the following:
1. The equipment, which was purchased on January 1, 2014, is estimated to have a useful life of four years.
2. One-third of the unearned rent revenue is still unearned at the end of the quarter.
3. The loan payable has an interest rate of 6%. Interest is paid on the first day of each following month and was last paid March 1, 2015.
4. Supplies on hand total $850 at March 31.
5. The one-year insurance policy was purchased for $14,400 on January 1.
6. Income tax is estimated to be $3,200 for the quarter
Instructions
Prepare the quarterly adjusting entries required at March 31, 2015.