justing entries Instructions Chart of Accounts Journal Final Question Instructio

Question

justing entries

Instructions

Chart of Accounts

Journal

Final Question

Instructions

On March 31, the following data were accumulated to assist the accountant in preparing the adjusting entries for Potomac Realty:

Chart of Accounts

a. The supplies account balance on March 31 is $5,640, the supplies on hand on March 31 are $1,445. b. The unearned rent account balance on March 31 is $5,400 representing the receipt of an advance payment on March 1 of four months’ rent from tenants. c. Wages accrued but not paid at March 31 are $2,125. d. Fees accrued but unbilled at March 31 are $18,590. e. Depreciation of office equipment is $4,785.

Explanation / Answer

(1).

Account Titles & Explanation

Debit

Credit

(a).

Supplies Expenses ($5640 – $1445)

$4195

      Supplies

$4195

(Adjusting entry for used supplies)

(b).

Unearned Rent ($5400 / 4)

$1350

      Rent Revenue

$1350

(Adjusting entry for unearned rent)

(c).

Wages Expense

$2125

      Wages Payable

$2125

(Adjusting entry for wages expense)

(d).

Accounts Receivable

$18590

      Fees Earned

$18590

(Adjusting entry for earned fees)

(e).

Depreciation Expense

$4785

      Accumulated Depreciation-Office equipment

$4785

(Adjusting entry for depreciation)

(2).

Difference between adjusting entries and correcting entries;

Adjusting entries are made at the end of accounting period to reflect accrual method of accounting. Adjusting entries are made for accrue expenses and losses, accrue revenues and gains, defer expenses, defer revenues, depreciation expense and bad debts expense etc.

Correcting entries are made for correcting discovered errors in an account. Normally correcting entries are made for correcting an erroneous amount and for correcting an entry that was recorded in the wrong account etc.

Account Titles & Explanation

Debit

Credit

(a).

Supplies Expenses ($5640 – $1445)

$4195

      Supplies

$4195

(Adjusting entry for used supplies)

(b).

Unearned Rent ($5400 / 4)

$1350

      Rent Revenue

$1350

(Adjusting entry for unearned rent)

(c).

Wages Expense

$2125

      Wages Payable

$2125

(Adjusting entry for wages expense)

(d).

Accounts Receivable

$18590

      Fees Earned

$18590

(Adjusting entry for earned fees)

(e).

Depreciation Expense

$4785

      Accumulated Depreciation-Office equipment

$4785

(Adjusting entry for depreciation)

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