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 $5,450. The supplies on hand on December 31 are $1,460.
•	The unearned rent account balance on December 31 is $4,700 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 $2,375.
•	Fees earned but unbilled at December 31 are $18,920.
•	Depreciation of office equipment is $4,965.

	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?

this is just an example of how it needs to be set up

Answer 1

Ans:

1.

Date	Account Name	Debit ($)	Credit ($)
Dec 31	Supplies Expense ($5450-$1460)	$3990
	Supplies		$3990
	(Being supplies consumed for the year)
Dec 31	Unearned Rent ($4700/4)	$1175
	Rent Revenue		$1175
	(Being unearned rent accounted)
Dec 31	Wages Expense	$2375
	Wages Payable		$2375
	(Being wages expense recorded)
Dec 31	Accounts Receivable	$18920
	Fees Revenue		$18920
	(Being fees revenue recorded)
Dec 31	Depreciation Expense	$4965
	Accumulated Depreciation- Office equipment		$4965
	(Being depreciation on office equipment)

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

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