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Question

On March 31, 2012 Easy Rental's Trial Balance is as

follows:

                       Debit             Credit


Cash                   $12,200


Prepaid Insurance.       $14,400


Supplies.               $2,800


Equipment.              $21,600


Accumulated Depreciation.                $5,400


Unearned Revenue.                       $9,600


Loan Payable.                          $20,000


Rent Revenue.                          $30,000


Salaries Expense.        $14,000


                       $65000.         $65000


The company closes their books monthly. An analysis of the accounts showed the following:


1. The equipment, purchased on January 1, 2011 is estimated to have a useful life of 4 years.


2. Two thirds of the unearned revenue is earned by the end of the month.


3. The loan payable has an interest rate of 6% which is paid monthly at the beginning of each month.


4. Supplies on hand totaled $850 on March 31.


5. The one year life insurance policy was purchased on March 1 for $14,400.


6.Income tax is estimated to be $2,200 for the month.


Instructions:


(A)Set up the T accounts and enter the beginning balances in the general ledger.


b) Prep the adjusting entries.


c) Post to T accounts and ďo an adjusted trial balance.

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