PR3-1A Adjusting entries On March 31, 2016, the following data were accumulated

Question

PR3-1A Adjusting entries On March 31, 2016, the following data were accumulated to assist the accountant in preparing the adjusting entries for Potomac Realty a. The supplies account halance on March 3 $5,62 Th sp on hand on Mach 31 OBJ.2 are $1,290 b. The uneamed rent account balance on March 31 is $0 ersenting the reeipt of an advance payment on March 1 of four months' rent from tenants. c. Wages accrued but not paid at March 31 are $2,290. d. Fees accrued but unbiled at March 31 are $16,825 e. Depreciation of office equipment is $4,600. Instructions 1. Journalize the adjusting entries required at March 31, 2016. 2Brielly explain the difference between adjusting entries an entries that would be made to correct errors

Explanation / Answer

Q1.

Q2. Adjusting entries are entries passed to adjust the year-end balances for any accrued expense, prepaid expense expired, supplies consumed, revenue unearned received earlier to be recognized, revenue not recognized yet, etc. It is to be done for adhering to the Matching principle of Accounting.

However, the entries made to correct the errors shall be done for rectifying the errors creep into accounting system because of the negligence of accountant. THese erros may be passed to entries.

adjusting entries Date Accounts title and explanations Debit$ Credit $ a. Supplies expense Dr. 4330     Supplies 4330 b. Unearned rent Account Dr. 1250      Rent revenue 1250 c. Wages expensne Dr. 2290        Accrued wages Account 2290 d. Accounts receivable Dr. 16825      Fees revenue 16825 e. Depreciation expense Dr. 4600     Accumulated Depreciation 4600

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