On December 31, the following data were accumulated for preparing the adjusting entries for Bellingham Realty: • The supplies account balance on December 31 is $5,635. The supplies on hand on December 31 are $1,495. • The unearned rent account balance on December 31 is $4,600 representing the receipt of an advance payment on December 1 of four months' rent from tenants. • Wages accrued but not paid at December 31 are $2,035. • Fees earned but unbilled at December 31 are $15,450. • Depreciation of office equipment is $4,420. Required: 1. Journalize the adjusting entries required at December 31. Refer to the Chart of Accounts for exact wording of account titles. 2. What is the difference between adjusting entries and correcting entries?

Answer and Explanation:

Date Adjusting entries Debit Credit Asset Liabilities Equity

Dec 31 Supplies Expense $4,140 Decrease

To Supplies $4,140 Decrease

(Being the supplies expense is recorded)

It is computed below:

= Account balance - still on hand

= $5,635 - $1,495

= $4,140

Dec 31 Unearned Rent revenue $1,150 Decresae

To Rent revenue $1,150 Increase

(Being the unearned rent revenue is recorded)

It is computed below:

= $4,600 : 4 months

= $1,150

Dec 31 Wages Expense $2,035 Decrease

To Wages payable $2,035 Increase

(Being the wages expense is recorded)

Dec 31 Accounts Receivable $15,450 Increase

To Fees earned $15,450 Increase

(Being the fees earned is recorded)

Dec 31 Depreciation expense $4,420 Decrease

To Accumulate depreciation

- Office Equipment $4,420 Decresae

(Being the depreciation expense is recorded)

2 Adjusting entries are the entries that are to be adjusted at the end of the accounting period but it is planed but the correcting entries are not planned it is required when we want to just correct the errors