Question

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expense. (Omit explanations.)

5 E3-6 (Adjusting Entries) Karen Weller, D.D.S., opened a dental practice on January 1, 2014. During the first month of operations, the following transactions occurred.
1. Performed services for patients who had dental plan insurance. At January 31, $750 of such services was performed but not yet billed to the insurance companies.
2. Utility expenses incurred but not paid prior to January 31 totaled $520. 3. Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a $60,000,
3-year note payable. The equipment depreciates $400 per month. Interest is $500 per month. 4. Purchased a one-year malpractice insurance policy on January 1 for $12,000. 5. Purchased $1,600 of dental supplies. On January 31, determined that $500 of supplies were on hand.

Answer 1

The adjusting entries at March 31 would involve Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expense.

Step-by-step explanation:

The adjusting entries at March 31 would involve several accounts:

• Depreciation Expense: The dental equipment purchased on January 1 depreciates $400 per month, so the adjusting entry would be a debit to Depreciation Expense for $400.
• Insurance Expense: The one-year malpractice insurance policy purchased on January 1 for $12,000 would need to be adjusted monthly. The adjusting entry would be a debit to Insurance Expense for 1/12th of the annual cost ($12,000/12 = $1,000).
• Interest Payable: The note payable on the dental equipment incurs monthly interest of $500. The adjusting entry would be a credit to Interest Payable for $500.
• Supplies Expense: $500 of dental supplies were determined to be on hand on January 31. The adjusting entry would be a debit to Supplies Expense for $1,100 ($1,600 - $500).