On May 31, 2014, the following data were accumulated to assist the accountant in preparing the adjusting entries for Oceanside Realty

On May 31, 2014, 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.


Instructions

1. Journalize the adjusting entries required at May 31, 2014.

2. Briefly explain the difference between adjusting entries and entries that would be made to correct errors.


Answer:


1. a. Accounts Receivable 19,750
Fees Earned 19,750
Accrued fees earned.
b. Supplies Expense 8,150
Supplies 8,150
Supplies used ($12,300 – $4,150).
c. Wages Expense 2,700
Wages Payable 2,700
Accrued wages.
d. Unearned Rent 3,000
Rent Revenue 3,000
Rent earned ($9,000 ÷ 3 months).
Depreciation Expense 3,200
e. Accumulated Depreciation—Equipment 3,200
Depreciation expense.

2. Adjusting entries are a planned part of the accounting process to update the
accounts. Correcting entries are not planned, but arise only when necessary to
correct errors.