Question

In: Accounting

On March 31, the following data were accumulated to assist the accountant in preparing the adjusting...

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 $5,635, the supplies on hand on March 31 are $1,495.
• The unearned rent account balance on March 31 is $4,600 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 $2,035.
• Fees accrued but unbilled at March 31 are $15,450.
• Depreciation of office equipment is $4,420.
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?

Solutions

Expert Solution

1-

Date Account title and Explanation

Dr.

$

Cr.

$
31 March Supplies Expense 4140
Supplies (5635 - 1495)

4140

Working note:-

Supplies expense = amount supplies before adjustment - amount of supplies on hand.

2-

Date Accout title and Explanation

Dr.

$

Cr.

$
31 March Unearned Rent 1150
Rent revenue(4600/4×1) 1150

Working note :-

Rent revenue = Unearned Rent / received for the period × no. Of month expired.

3-

Date Accout title and Explanation

Dr.

$

Cr.

$
31March Wages Expense 2035
Wages payable 2035

4-

Date Accout title and Explanation

Dr.

$

Cr.

$
31 March Accout Receivable 15450
Fees earned 15450

5-

Date Accout title and Explanation

Dr.

$

Cr.

$
31 March Depericiation 4420
Accumulated depreciation- office equipment 4420

Q2- Adjusting Entries :-

Adjusting entries are a planned part of the accounting process to update the accounts.

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principles, and expenses recognition principle. All adjusting entries affects at least one income statement account and one balance sheet Accout ( Asset and liabilities).

Correcting entries :-

These entries refers to the journal entries that is made on order to fix / correct an error in the transaction which are previously recorded in the ledger.

Correcting entries are not planned but arise only when necessary to correct errors.

ekkarill92 answered 1 year ago
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