Question

On March 31, the following data were accumulated to assist the accountant in preparing the adjusting entries for Potomac Realty: · The supplies account balance on March 31 is $5,225, the supplies on hand on March 31 are $1,275. • The unearned rent account balance on March 31 is $5,700 representing the receipt of an advance payment on March 1 of four months' rent from tenants. • Wages accrued but not paid at March 31 are $2,485. • Fees accrued but unbilled at March 31 are $16,245. • Depreciation of office equipment is $4,005. Required: 1. Journalize the adjusting entries required at March 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

Date	Adjusting entries	Post ref.	Debit	Credit	Asset	Liabilities	Equity
March 31	Supplies Expense		3950				↓	=5225-1275
	Supplies			3950	↓
March 31	Unearned Rent		1425			↓		=5700*1/4
	Rent revenue			1425			↑
March 31	Wages Expense		2485				↓
	Wages payable			2485		↑
March 31	Accounts Receivable		16245		↑
	Fees earned			16245			↑
March 31	Depreciation expense		4005				↓
	Accumulate depreciation-Office Equipment			4005	↓
2
Adjusting entries are a planned part of the accounting process to update the accounts. Correcting entries are not planned,
but arise only when necessary to correct errors.