Question

On-Time Truckers prepares monthly financial statements. On July 1, the Supplies account had a balance of $3,500. During July, additional supplies were purchased for $4,800 and that amount was debited to Supplies Expense. On July 31, a physical count of supplies revealed that there was $2,200 on hand.

Prepare the adjusting journal entry that On-Time Truckers should make on July 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

• Supplies used = Beginning inventory + Supplies purchased – Supplies on hand
  = $ 3500 + $ 4800 - $ 2200
  = $ 6100
• Supplies used = Supplies expenses to be recorded = $ 6100
• Amount already debited to Supplies expense = $ 4800
• Additional amount to be debited = $ 6100 – 4800 = $ 1300
• Adjusting entry

Date	Accounts title	Debit	Credit
31-Jul	Supplies Expense	$1,300
	Supplies		$1,300
	(to record the adjustments)