Question

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

•	The supplies account balance on December 31 is $1,585. The supplies on hand on December 31 are $320.
•	The unearned rent account balance on December 31 is $10,350 representing the receipt of an advance payment on December 1 of five months’ rent from tenants.
•	Wages accrued but not paid at December 31 are $3,710.
•	Fees earned but unbilled at December 31 are $21,610.
•	Depreciation of office equipment is $3,340.

	Required:
1.	Journalize the adjusting entries required at December 31. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
2.	What is the difference between adjusting entries and correcting entries?

CHART OF ACCOUNTS
Flagship 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

1. Journalize the adjusting entries required at December 31. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 Adjusting Entries 2 4 5 7 8 9 10 11

2. What is the difference between adjusting entries and correcting entries?

Both adjusting entries and correcting entries are not a planned part of the accounting process.

Both adjusting entries and correcting entries are a planned part of the accounting process.

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

Correcting entries are a planned part of the accounting process, adjusting entries are not planned but arise when necessary to adjust errors.

Answer 1

1)
Date	Accounts title and explanations	Debit $	Credit $
December 31	Supplies expenses ( $ 1,585 (-) $ 320)	$ 1,265
	Supplies		$ 1,265
	(To record the Supplies)
December 31	Unearned Rent ($ 10,350 / 5 )	$ 2,070
	Rent revenue		$ 2,070
	(To record the Unearned Rent)
December 31	Wages expense	$ 3,710
	Wages payable		$ 3,710
	(To record the Wages expense)
December 31	Accounts Receivable	$ 21,610
	Fees earned		$ 21,610
	(To record the Fees earned)
December 31	Depreciation Expense	$ 3,340
	Accumulated depreciation		$ 3,340
	(To record the Depreciation Expense)
	2)
	Adjusting entries are a planned part of the accounting process, correcting entries are not planned but arise when necessary to correct errors