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.
