On December 31, the following data were accumulated for preparing the adjusting entries for Flagship Realty: • The supplies account balance on December 31 is $1,585. The supplies on hand on December 31 are $320. • The unearned rent account balance on December 31 is $10,350 representing the receipt of an advance payment on December 1 of five months’ rent from tenants. • Wages accrued but not paid at December 31 are $3,710. • Fees earned but unbilled at December 31 are $21,610. • Depreciation of office equipment is $3,340. Required: 1. Journalize the adjusting entries required at December 31. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. 2. What is the difference between adjusting entries and correcting entries? CHART OF ACCOUNTSFlagship RealtyGeneral Ledger ASSETS 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 15 Land 16 Office Equipment 17 Accumulated Depreciation-Office Equipment LIABILITIES 21 Accounts Payable 22 Unearned Rent 23 Wages Payable 24 Taxes Payable EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends REVENUE 41 Fees Earned 42 Rent Revenue EXPENSES 51 Advertising Expense 52 Insurance Expense 53 Rent Expense 54 Wages Expense 55 Supplies Expense 56 Utilities Expense 57 Depreciation Expense 59 Miscellaneous Expense Journalize the adjusting entries required at December 31. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. PAGE 10 JOURNAL. ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 Adjusting Entries 2 3 4 5 6 7 8 9 10 11 2. What is the difference between adjusting entries and correcting entries? () Both adjusting entries and correcting entries are a planned part of the accounting process. () Correcting entries are a planned part of the accounting process, adjusting entries are not planned but arise when necessary to adjust errors. () Adjusting entries are a planned part of the accounting process, correcting entries are not planned but arise when necessary to correct errors. (). Both adjusting entries and correcting entries are not a planned part of the accounting process.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
| • | The supplies account balance on December 31 is $1,585. The supplies on hand on December 31 are $320. |
| • | The unearned rent account balance on December 31 is $10,350 representing the receipt of an advance payment on December 1 of five months’ rent from tenants. |
| • | Wages accrued but not paid at December 31 are $3,710. |
| • | Fees earned but unbilled at December 31 are $21,610. |
| • |
| Required: | |
| 1. | Journalize the adjusting entries required at December 31. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. |
| 2. | What is the difference between adjusting entries and correcting entries? |
CHART OF ACCOUNTSFlagship RealtyGeneral Ledger
| ASSETS | |
| 11 | Cash |
| 12 | Accounts Receivable |
| 13 | Supplies |
| 14 | Prepaid Insurance |
| 15 | Land |
| 16 | Office Equipment |
| 17 |
| LIABILITIES | |
| 21 | Accounts Payable |
| 22 | Unearned Rent |
| 23 | Wages Payable |
| 24 | Taxes Payable |
| EQUITY | |
| 31 | Common Stock |
| 32 | Retained Earnings |
| 33 | Dividends |
| REVENUE | |
| 41 | Fees Earned |
| 42 | Rent Revenue |
| EXPENSES | |
| 51 | Advertising Expense |
| 52 | Insurance Expense |
| 53 | Rent Expense |
| 54 | Wages Expense |
| 55 | Supplies Expense |
| 56 | Utilities Expense |
| 57 | Depreciation Expense |
| 59 | Miscellaneous Expense |
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
|---|---|---|---|---|---|---|---|---|
|
1
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Adjusting Entries
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