The balance in the supplies account, before adjustment at the end of the year, i

ID: 2401261 • Letter: T

Question

The balance in the supplies account, before adjustment at the end of the year, is $5,330. The year end is December 31.

Journalize the December 31 adjusting entry required if the amount of supplies on hand at the end of the year is $1,875. Refer to the Chart of Accounts for exact wording of account titles.

Chart of Accounts

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

Explanation / Answer

Answer:

Adjusting entry for supplies at the end of the year:

General Journal

Date

Description

Ledger Folio

Debit ($).

Credit ($)

December 31

Supplies expense

3,455*

Supplies

3,455

*Supplies expense

= Balance before adjustment -Ending balance

= $ 5,330 - $ 1,875

= $ 3,455

$ 3,455 worth of supplies has been used during the year, so it is considered as supplies expense. And balance in supplies account before adjustment will reduce by $ 3,455 leaving ending balance of $ 1,875.