Question

On December 31, the following data were accumulated for preparing the adjusting entries for Bellingham Realty:

•	The supplies account balance on December 31 is $5,635. The supplies on hand on December 31 are $1,495.
•	The unearned rent account balance on December 31 is $4,600 representing the receipt of an advance payment on December 1 of four months’ rent from tenants.
•	Wages accrued but not paid at December 31 are $2,035.
•	Fees earned but unbilled at December 31 are $15,450.
•	Depreciation of office equipment is $4,420.

	Required:
1.	Journalize the adjusting entries required at December 31. Refer to the Chart of Accounts for exact wording of account titles.
2.	What is the difference between adjusting entries and correcting entries?

CHART OF ACCOUNTS
Bellingham Realty
General Ledger
ASSETS 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 15 Land 16 Office Equipment 17 Accumulated Depreciation-Office Equipment LIABILITIES 21 Accounts Payable 22 Unearned Rent 23 Wages Payable 24 Taxes Payable EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends	REVENUE 41 Fees Earned 42 Rent Revenue EXPENSES 51 Advertising Expense 52 Insurance Expense 53 Rent Expense 54 Wages Expense 55 Supplies Expense 56 Utilities Expense 57 Depreciation Expense 59 Miscellaneous Expense

Answer 1

(1)

Date	Account Titles	Debit	Credit
Dec 31	Supplies Expense ($5635 - $1495)	$4140
	Supplies		$4140
Dec 31	Unearned rent ($4600/4)	$1150
	Rent Revenue		$1150
Dec 31	Wages Expense	$2035
	Wages Payable		$2035
Dec 31	Accounts Receivable	$15450
	Fees Earned		$15450
Dec 31	Depreciation Expense	$4420
	Accumulated Depreciation-Office Equipment		$4420

(2) Adjusting entries are those entries which are preplanned part. But Correcting entries are not preplanned but arise when necessary to correct entries