Question

A partial adjusted trial balance of Novak Company at January 31, 2020, shows the following. NOVAK COMPANY ADJUSTED TRIAL BALANCE JANUARY 31, 2020 Debit Credit Supplies $1,040 Prepaid Insurance 4,440 Salaries and Wages Payable $1,140 Unearned Service Revenue 1,090 Supplies Expense 950 Insurance Expense 740 Salaries and Wages Expense 2,140 Service Revenue 2,340 Answer the following questions, assuming the year begins January 1. If the amount in Supplies Expense is the January 31 adjusting entry, and $850 of supplies was purchased in January, what was the balance in Supplies on January 1?

Answer 1

Answer:

The balance in Supplies on January 1 is $1,140

Explanation:

The computation of the opening balance of supplies is shown below:

We know that

The supplies expense is computed by

Supplies expense = Supplies opening balance  + purchase made - ending balance of supplies

$950 =  Supplies opening balance balance + $850 - $1,040

$950 + $190 = Supplies opening balance balance

So, the opening balance of supplies is $1,140