Question

The ledger of Shamrock, Inc. on March 31, 2017, includes the following selected accounts before adjusting entries.

Debit Credit
Supplies 2,610
Prepaid Insurance 2,480
Equipment 22,500
Unearned Service Revenue 12,000

An analysis of the accounts shows the following.

1. Insurance expires at the rate of $310 per month.
2. Supplies on hand total $960.
3. The equipment depreciates $150 per month.
4. During March, services were performed for two-fifths of the unearned service revenue.

Required:
Prepare the adjusting entries for the month of March.

Answer 1

Answer and Explanation:

The adjusting entries are as follows:

1 Insurance expense Dr $310

To Prepaid Insurance $310

(Being insurance expense is recorded)

2 Supplies expense Dr $1,650 ($2,610 - $960)

To Supplies $1,650

(Being supplies expense is recorded)

3 Depreciation expense Dr $150

To Accumulated Depreciation - Equipment $150

(Being depreciation expense is recorded)

4 Unearned service revenue Dr (two-fifth of $12,000) $4,800

To Service Revenue $4,800

(Being service revenue is recorded)