Question

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

a.	Fees accrued but unbilled at May 31 are $19,750.
b.	The supplies account balance on May 31 is $12,300. The supplies on hand at May 31 are $4,150.
c.	Wages accrued but not paid at May 31 are $2,700.
d.	The unearned rent account balance at May 31 is $9,000, representing the receipt of an advance payment on May 1 of three months’ rent from tenants.
e.	Depreciation of office equipment is $3,200.

	Required:
1.	Journalize the adjusting entries required at May 31. Refer to the Chart of Accounts for exact wording of account titles.
2.	What is the difference between adjusting entries and correcting entries?

Chart of Accounts

CHART OF ACCOUNTS

Oceanside Realty

General Ledger

	ASSETS
11	Cash
12	Accounts Receivable
13	Supplies
14	Prepaid Insurance
15	Land
16	Equipment
17	Accumulated Depreciation-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

Answer 1

General Journal	Debit	Credit
Accounts Receivable	$19,750
Fees Earned		$19,750
Accrued fees earned.
Supplies Expense	8150
Supplies		8150
Supplies used ($12300 – $4150).
Wages Expense	2700
Wages Expens		2700
Accrued wages.
Unearned Rent	3000
Rent Revenue		3000
Rent earned ($9000/3)
Depreciation Expense	3200
Accumulated Depreciation—Equipment		3200
Depreciation expense.
Adjusting Entries
Adjusting entries are a planned part of the accounting process to update the accounts.
Correcting entries
Correcting entries are not planned but arise only when necessary to correct errors.