Question

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:

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?

none

X

Chart of Accounts

CHART OF ACCOUNTS
Potomac Realty
General Ledger
ASSETS
11 Cash
12 Accounts Receivable
13 Supplies
14 Prepaid Insurance
15 Land
16 Equipment
17 Accumulated Depreciation-Office Equipment
19 Accumulated Depreciation-Automobiles
LIABILITIES
21 Accounts Payable
22 Unearned Rent
23 Wages Payable
24 Taxes Payable
EQUITY
31 Owner, Capital
32 Owner, Drawing
REVENUE
41 Fees Earned
42 Rent Revenue
EXPENSES
51 Advertising Expense
52 Insurance Expense
53 Rent Expense
54 Wages Expense
55 Supplies Expense
56 Utilities Expense
57 Depreciation Expense
59 Miscellaneous Expense

none

X

Journal

1. Journalize the adjusting entries required on March 31. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

Adjusting Entries

2

3

4

5

6

7

8

9

10

11

Solution

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

Adjusting Entries

2

3

4

5

6

7

8

9

10

11

Points:

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Explanation

none

X

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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