a. Fees accrued but unbilled at May 31 are $19,750.
b. The supplies account balance on May 31 is $12,300. The supplies on hand at May 31 are $4,150.
c. Wages accrued but not paid at May 31 are $2,700.
d. 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.
e. Depreciation of office equipment is $3,200.
Instructions
1. Journalize the adjusting entries required at May 31, 2014.
2. Briefly explain the difference between adjusting entries and entries that would be made to correct errors.
Answer:
1. a. Accounts Receivable 19,750
Fees Earned 19,750
Accrued fees earned.
b. Supplies Expense 8,150
Supplies 8,150
Supplies used ($12,300 – $4,150).
c. Wages Expense 2,700
Wages Payable 2,700
Accrued wages.
d. Unearned Rent 3,000
Rent Revenue 3,000
Rent earned ($9,000 ÷ 3 months).
Depreciation Expense 3,200
e. Accumulated Depreciation—Equipment 3,200
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.