Question

Instructions On December 31, the following data were accumulated for preparing the adjusting entries for Bellingham Realty • The supplies account balance on December 31 is $1,375. The supplies on hand on December 31 are $280. • The unearned rent account balance on December 31 is 89,000 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 $3.220. • Fees earned but unbilled at December 31 are $18.750. • Depreciation of office equipment is $2,900. 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?

Answer 1

Requirement 1:

Adjusting Entries:

General Journal				Accounting Equation
Date	Account title and Explanation	Debit	Credit	Assets	Liabilities	Equity
Dec 31	Supplies expense [1,375-280]	$1,095				-
	Supplies		$1,095	-
	[To record supplies expense]
Dec 31	Unearned rent [9,000 x 1/12]	$750			-
	Rent revenue		$750			+
	[To record rent from unearned rent]
Dec 31	Wages expense	$3,220				-
	Wages payable		$3,220		+
	[To record accrued wages expense]
Dec 31	Accounts receivable	$18,750		+
	Fees earned		$18,750			+
	[To record accrued revenue]
Dec 31	Depreciation expense	$2,900				-
	Accumulated depreciation-office equipment		$2,900	-
	[To record depreciation expense]

Requirement 2:

Answer:Adjusting entries are a planned part of the accounting process, correcting entries are not planned but arise when necessary to correct errors.

Explanation:

Adjusting entries are planned part of the accounting process where as correcting entries are not planned but arise due to errors in accounting process.