Question

Analyzing Adjusting Journal Entries, Prepaid Asset and Deferred Revenue Voss Inc., an accounting firm, adjusts and closes its accounts each December 31. Below are two situations requiring adjusting entries.
During the current year, supplies were purchased for $1,125 cash. The inventory of supplies at the prior year-end was $225. At the current year-end, inventory remaining was $360. Prepare the adjusting entry required for each of the following separate cases.
a. Case A-the $1,125 was debited to Supplies Expense. What is the balance of Supplies at year-end?
General Journal
Ref. Account Name Dr. Cr.
Case A Supplies 225 0
Supplies Expense 0 225
Case A: Balance of Supplies at year-end: $ 225
b. Case B the $1,125 was debited to supplies. What is the balance of Supplies at year-end?
General Journal
Ref. Account Name Dr. Cr.
Case B Supplies 900 0
Expense Supplies 0 900
Case B: Balance of Supplies at year-end: $ 225

Answer 1

Answer:

a. Case A-the $1,125 was debited to Supplies Expense. What is the balance of Supplies at year-end?

The previous balance was Supplies $225

If the following was made:

Dr Supplies expense 1,125

    Cr Supplies 1,125

Then the ending balance of Supplies would be = -$900

b. Case B the $1,125 was debited to supplies. What is the balance of Supplies at year-end?

The previous balance was Supplies $225

If the following was made:

Dr Supplies 1,125

    Cr Supplies expense 1,125

Then the ending balance of Supplies would be = $1,350

Explanation:

During the current year, supplies were purchased for $1,125 cash. The inventory of supplies at the prior year-end was $225.

Adjusting entry to record supplies expense = $1,125 + $225 - $360

Dr Supplies expense 990

    Cr Supplies 990

Ending balance of supplies inventory = $360