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

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

• Fees accrued but unbilled at May 31 are $19,750.

• The supplies account balance on May 31 is $12,300. The supplies on hand at May 31 are $4,150.

• Wages accrued but not paid at May 31 are $2,700.

• 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.

• Depreciation of office equipment is $3,200.

Instructions

1. Journalize the adjusting entries required at May 31.

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

Answer:

1.  May 31 Accounts Receivable19,750

Fees Earned19,750

31 Supplies Expense8,150

Supplies8,150

31 Wages Expense2,700

Wages Payable2,700

31 Unearned Rent3,000

Rent Revenue3,000

31 Depreciation Expense3,200

Accumulated Depreciation—Equipment 3,200

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.