Question

Question: For each separate case below, follow the three-step process for adjusting the supplies asset account at

December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the

current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1

to step 2. Assume no other adjusting entries are made during the year.

a. Supplies. The Supplies account has a \(300 debit balance to start the year. No supplies were purchased

during the current year. A December 31 physical count shows \)110 of supplies remaining.

b. Supplies. The Supplies account has an \(800 debit balance to start the year. Supplies of \)2,100 were

purchased during the current year and debited to the Supplies account. A December 31 physical count

shows \(650 of supplies remaining.

c. Supplies. The Supplies account has a \)4,000 debit balance to start the year. During the current year,

supplies of \(9,400 were purchased and debited to the Supplies account. The inventory of supplies

available at December 31 totaled \)2,660.

Short answer

The Supplies expense account is debit and supplies credit with $2,250.

Step-by-step solution

Step-by-Step SolutionStep 1: Definition of supplies account

A supply account is a type of current asset account that shows the cost of the supplies.

Current account should equal

The current account balance is equal to $800

Current account should equal

The current account balance should equal $650

Adjustment entry of supplies account

	Journal entry
Date	Particulars	Debit	Credit
December 31	Supplies Expense	$2,250
	Supplies		$2,250
	(Adjustment entry of supplies account)

$$\begin{gathered} \text{Supplies} \text{Expense =} \text{Beginning} \text{Balance +} \text{Supplies} \text{Purchased -} \text{Ending} \text{balance} \text{of} \text{supplies} \\ \text{=} \text{\$ 110 + \$ 2,100 - \$ 650} \\ \text{= \$ 2,250} \end{gathered}$$