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?

Answer 1

Answer and Explanation:

Date       Adjusting entries Debit Credit Asset Liabilities Equity  

Dec 31 Supplies Expense $4,140                  Decrease

                          To  Supplies   $4,140 Decrease

(Being the supplies expense is recorded)

It is computed below:

= Account balance - still on hand

= $5,635 - $1,495

= $4,140    

Dec 31 Unearned Rent revenue $1,150   Decresae    

                       To Rent revenue  $1,150                             Increase

(Being the unearned rent revenue is recorded)

It is computed below:

= $4,600 ÷ 4 months

= $1,150

Dec 31 Wages Expense $2,035                                Decrease

                    To Wages payable $2,035   Increase

(Being the wages expense is recorded)  

Dec 31 Accounts Receivable $15,450 Increase  

               To  Fees earned $15,450                              Increase

(Being the fees earned is recorded)  

Dec 31 Depreciation expense   $4,420                      Decrease  

            To Accumulate depreciation                          

                    - Office Equipment $4,420 Decresae  

(Being the depreciation expense is recorded)  

2 Adjusting entries are the entries that are to be adjusted at the end of the accounting period but it is planed but the correcting entries are not planned it is required when we want to just correct the errors