On March 31, the following data were accumulated to assist the accountant in preparing the adjusting entries for Potomac Realty:
a. | The supplies account balance on March 31 is $5,450, the supplies on hand on March 31 are $1,460. |
b. | The unearned rent account balance on March 31 is $4,700 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 $2,375. |
d. | Fees accrued but unbilled at March 31 are $18,920. |
e. | Depreciation
The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life. of office equipment is $4,965. |
Required: | |
1. | Journalize the adjusting entries required on 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? |
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Chart of Accounts
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Journal
1. Journalize the adjusting entries required on March 31. Refer to the Chart of Accounts for exact wording of account titles.
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JOURNAL
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Solution
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |
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Points:
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Explanation
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Final Question
2. What is the difference between adjusting entries and correcting entries?
Both adjusting entries and correcting entries are a planned part of the accounting process.
Adjusting entries are a planned part of the accounting process, correcting entries are not planned but arise when necessary to correct errors.
Both adjusting entries and correcting entries are not a planned part of the accounting process.
Correcting entries are a planned part of the accounting process, adjusting entries are not planned but arise when necessary to adjust errors.
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