Question

 

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

a.The supplies account balance on March 31 is $5,620, the supplies on hand on March 31 are $1,290.

b.The unearned rent account balance on March 31 is $5,000 representing the receipt of an advance payment on March 1 of four months’ rent from tenants.

c.Wages accrued but not paid at March 31 are $2,290

d.Fees accrued but unbilled on March 31 are $16,825.

e.Depreciation of office equipment is $4,600.

CHART OF ACCOUNTS Potomac RealtyGeneral Ledger
	ASSETS
11	Cash
12	Accounts Receivable
13	Supplies
14	Prepaid Insurance
15	Land
16	Equipment
17	Accumulated Depreciation-Office Equipment
19	Accumulated Depreciation-Automobiles
	LIABILITIES
21	Accounts Payable
22	Unearned Rent
23	Wages Payable
24	Taxes Payable
	EQUITY
31	Owner, Capital
32	Owner, Drawing
	REVENUE
41	Fees Earned
42	Rent Revenue
	EXPENSES
51	Advertising Expense
52	Insurance Expense
53	Rent Expense
54	Wages Expense
55	Supplies Expense
56	Utility Expense
57	Depreciation Expense
59	Miscellaneous Expense

	Required:
1.	Journalize the adjusting entries required on March 31. Refer to the Chart of Accounts for the exact wording of account titles.
2.	What is the difference between adjusting entries and correcting entries?
	A) Both adjusting entries and correcting entries are a planned part of the accounting process.
	B) Adjusting entries are a planned part of the accounting process, correcting entries are not planned but arise when necessary to correct errors.
	C) Both adjusting entries and correcting entries are not a planned part of the accounting process.
	D) Correcting entries are a planned part of the accounting process, adjusting entries are not planned but arise when necessary to adjust errors.