On October 31, 2012, the following data were accumulated to assist the accountant in
preparing the adjusting entries for Dependable Realty:
a. The supplies account balance on October 31 is $3,975. The supplies on hand on October 31 are $1,050.
b. The unearned rent account balance on October 31 is $11,000, representing the receipt of an advance payment on October 1 of four months’ rent from tenants.
c. Wages accrued but not paid at October 31 are $2,500.
d. Fees accrued but unbilled at October 31 are $4,900.
e. Depreciation of office equipment is $1,100.
Instructions
1. Journalize the adjusting entries required at October 31, 2012.
2. Briefly explain the difference between adjusting entries and entries that would be made to correct errors.
Answer:
1. a. Supplies Expense ....................................................... 2,925
Supplies.................................................................. 2,925
Supplies used ($3,975 – $1,050).
b. Unearned Rent............................................................. 2,750
Rent Revenue......................................................... 2,750
Rent earned ($11,000/4).
c. Wages Expense........................................................... 2,500
Wages Payable....................................................... 2,500
Accrued wages.
d. Accounts Receivable .................................................. 4,900
Fees Earned ........................................................... 4,900
Accrued fees earned.
e. Depreciation Expense................................................. 1,100
Accumulated Depreciation—Office Equipment .. 1,100
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.
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