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 $5,640. The supplies on hand on December 31 are $1,445. • The unearned rent account balance on December 31 is $5,400 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 $2,125. • Fees earned but unbilled at December 31 are $18,590. • Depreciation of office equipment is $4,785. 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

Answer:

Accounts Titles and Explanation Debit Credit

1.

31-Dec

Dr Supplies Expenses $ 4,195

Cr Supplies $ 4,195

31-Dec

Dr Unearned Rent $ 1,350

Cr Rent Revenue $ 1,350

31-Dec

Dr Wages Expenses $ 2,125

Cr Wages Payable $ 2,125

31-Dec

Dr Accounts Receivable $ 18,590

Cr Fess Revenue $ 18,590

31-Dec

Dr Depreciation Expenses $ 4,785

Cr Acc. Depreciation - Office Equipment $ 4,785

2.

Adjusting entries:

Adjusting entries are often required for every accounting period to reflect the accrual method of accounting in financial statement .

While Correcting entries are often made to rectify any error recorded in the past.

Explanation:

Accounts Titles and Explanation Debit Credit

1.

31-Dec

Dr Supplies Expenses $ 4,195 ($5,640-$1,445)

Cr Supplies $ 4,195

31-Dec

Dr Unearned Rent $ 1,350

(5,400/4)

Cr Rent Revenue $ 1,350

31-Dec

Dr Wages Expenses $ 2,125

Cr Wages Payable $ 2,125

31-Dec

Dr Accounts Receivable $ 18,590

Cr Fess Revenue $ 18,590

31-Dec

Dr Depreciation Expenses $ 4,785

Cr Acc. Depreciation - Office Equipment $ 4,785

2.

Adjusting entries:

Adjusting entries are often required for every accounting period to reflect the accrual method of accounting in financial statement .

While Correcting entries are often made to rectify any error recorded in the past.