Question

At March 1, 2013, Minutemen Corp. had supplies on hand of $500. During the month, Minutemen purchased supplies of $1,200 and used supplies of $1,400. The March 31 adjusting journal entry should include a _______.

Answer 1

Answer:

The March 31 adjusting journal entry should include a:

Work In Progress Account $ 1,400 (debit)

Inventories/ Supplies $ 200 (credit)

Cash $1,200 (credit)

Explanation:

When Minutemen purchased supplies of $1,200:

Inventories/ Supplies $ 1,200 (debit)

Cash $1,200 (credit)

When Minutemen used supplies of $1,400 :

Work In Progress Account $ 1,400 (debit)

Inventories/Supplies $1,400 (credit)

Combined Journal

Work In Progress Account $ 1,400 (debit)

Inventories/ Supplies $ 200 (credit)

Cash $1,200 (credit)

Answer 2

Answer:

Debit Supplies expense $1,400

Credit Supplies account  $1,400

Explanation:

The change in supplies account balance at the start of a period and at the end of the period is as a result of 2 factors namely; use and purchases.

While use will result in a decrease in the account balance, purchases will cause an increase.  Hence when a purchase is made, debit supplies account credit cash/accounts payable, when supplies are used, credit supplies and debit supplies expense.

This may be expressed mathematically as

Opening balance + purchases - use = closing balance

$500 + $1,200 - $1,400 = closing supplies account balance

closing supplies account balance = $300

Adjusting entries required,

Debit Supplies expense $1,400

Credit Supplies account  $1,400