the entry to adjust for the cost of supplies used during the accounting period is This is a topic that many people are looking for. bluevelvetrestaurant.com is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, bluevelvetrestaurant.com would like to introduce to you Module 3, V4 – Supplies Expense Adjusting Entry Example. Following along are instructions in the video below:
“Always when we have a question. We re gonna start by reading the whole question question pink ink is a wholesaler who sells products to retailers the following transactions occurred. 2020. Provide the original entry also called the transactional entry.
Which is an exchange between two parties as well as the adjusting entry for each scenario. The company has a december 31st year end they record. Adjusting entries annually using the balance sheet. Method.
This is exactly what i demonstrated to you when we did the flow chart alright let s go back to the question at the start of the year the business has office supplies of. 1200 on july. 18th they purchased 1500. Dollars of additional supplies on account.
At december 31st account of the supplies indicates that there are only 600 of supplies remaining. So i m gonna move down. So that i can start working on this to do my calculations. I prefer to work in t accounts.
So that s what i m gonna do i know supplies have an opening balance so a balance that s already on the trial balance of 1200 assets are debit..
1200 on july 18th they purchased 1500 of additional supplies on account so july 18th. What do we get we got an asset. Because it has future economic benefit. What did we give away we gave away an iou a promise to pay our supplier in the future accounts payable both of these 1500 i m gonna update my supplies account at this point i have 2700 of supplies now time moves on at december 31st.
A count of the supplies indicates that there are only 600 of supplies remaining. So if there are only 600 of supplies remaining. I can look to see what do i want my t account to say well i want my t account to say 600 if i then work. Backwards i can calculate how to move from 2700 to 600 that s debit balance that i want i need to put a credit against it in order to reduce supplies by 2100.
That s what s being used or consumed to help generate revenue..
I now have to record my adjusting entry december 31st. What did i get i got the use of the supplies to help generate revenue supplies. Expense. 2100 what did i give.
Away i gave away or used up. Supplies. 2100 you ll notice that now my. Supplies expense has a balance of 2100.
That s because this has been used or consumed to help generate revenue..
If i look at my statement of financial position. I can see that under current assets. I ll have a balance in my supplies 600. Which have future economic benefit because i can use or consume it in the future to help generate revenue on my income.
Statement i ll have an expense supplies expense 2100. That s being used or consumed to help generate revenue let s see if we re matching our flow chart. We started off with an opening balance then there was an exchange between two parties debit asset credit cash or liability over time we used or consumed the asset supplies in that case at the end of the period. I have to do an adjusting entry debit supplies expense credit supplies perfect ” .
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