December 31 are $280. The unearned rent account balance on Decembel of an advanc

ID: 2548505 • Letter: D

Question

December 31 are $280. The unearned rent account balance on Decembel of an advance payment on December 1 of four months' rent !IU Wages accrued but not paid at December 31 are $3,220. Fees earned but unbilled at December 31 are $18,750. Depreciation of office equipment is $2,900. .The supplies Instructions 1. J that wok ournalize the adjusting entries required at December 31. Briefly explain the difference between adjusting entries and ent be made to correct errors. OBJ.2,3,4 PR 3-2A Adjusting entries Selected account balances before adjustment for A of the current year, are as follows Atlantic Coast Realty at July 31. the end Credits Debits $ 75,000 345,700 Accounts Receivable Equipment Accumulated Depreciation-Equipment Prepaid Rent Supplies Wages Payable Unearned Fees Fees Earned Wages Expense Rent Expense Depreciation Expense $112,500 9,000 3,350 12,000 660,000 325,000 Supplies Expense Data needed for year-end adjustments are as follows: Unbilled fees at July 31, $11,150. Supplies on hand at July 31, $900. Rent expired, $6,000 . Depreciation of equipment during year, $8,950. Unearned fees at July 31, $2,000. . Wages accrued but not paid at July 31, $4,840.

Explanation / Answer

Particulars

Debit

Credit

Unbilled fees A/C Dr.

To Fees earned A/C

(On being fees earned but not charged from the client is recognised.)

11,150

No adjustment entry of supplies on hand as on July 31 (Closing stock) will be made. It will be incorporated on the debit side of the trial balance as it is. Though while transferring of revenue items in the Trading & Profit/Loss account, following entry will be made.

[Closing Stock Dr.

To Trading A/C

900

900]

Rent Expense A/C Dr.

To Prepaid Expense A/C

(On being prepaid rent expense is expired, and it is being transferred to expense account.)

6,000

Depreciation on equipment A/C Dr.

To Equipment A/C

(On being depreciation is charged on the equipment.)

8,950

Unearned fees A/C Dr.

To Fees earned A/c

(On being unearned fees which is now earned is being recognised as income by transferring to Fees earned account. [Change in balance of Unearned fees A/C = 12,000 - 2,000 = 10,000])

10,000

Wages Expense A/C Dr.

To Wages payable A/C

(On being wages are outstanding to be paid, so they are recognised as expense and as liability to be paid.)

4,840