Question

The City of Nickston uses the purchases method to account for the acquisition of supplies by its General Fund. At the end of fiscal 2018, the supplies inventory was valued at $63,000. At the end of fiscal 2019, the supplies inventory was valued at $71,000. Prepare the journal entry that needs to be made at the end of fiscal 2019 to adjust the amount of the supplies inventory

Answer 1

Answer:

See explanation

Explanation:

To record the adjusted journal entries, we have to determine the supplies purchases during the year . In that case, 2018 balance was $63,000. 2019 supplies inventory balance was $71,000. Therefore, the company purchased = $(71,000 - 63,000) = $8,000 supplies during the year. The journal entry is as follows:

Debit     Supplies      $8,000

Credit    Accounts payable/Cash     $8,000

Note: Assume that the company purchased the supplies either cash or on account.