Question

The balance in the supplies account, before adjustment at the end of the year, is $5,330. The year end is December 31.

Journalize the December 31 adjusting entry required if the amount of supplies on hand at the end of the year is $1,875. Refer to the Chart of Accounts for exact wording of account titles.

Chart of Accounts

CHART OF ACCOUNTS

General Ledger

	ASSETS
11	Cash
12	Accounts Receivable
13	Supplies
14	Prepaid Insurance
15	Land
16	Equipment
17	Accumulated Depreciation-Equipment
19	Accumulated Depreciation-Automobiles

	LIABILITIES
21	Accounts Payable
22	Unearned Fees
23	Salaries Payable
24	Taxes Payable

	EQUITY
31	John Doe, Capital
32	John Doe, Drawing

	REVENUE
41	Fees Earned

	EXPENSES
51	Advertising Expense
52	Insurance Expense
53	Rent Expense
54	Salary Expense
55	Supplies Expense
56	Utilities Expense
57	Depreciation Expense
59	Miscellaneous Expense

Answer 1

Answer:

Adjusting entry for supplies at the end of the year:

General Journal

Date	Description	Ledger Folio	Debit ($).	Credit ($)
December 31	Supplies expense	55	3,455*
	Supplies	13		3,455

*Supplies expense

= Balance before adjustment -Ending balance

= $ 5,330 - $ 1,875

= $ 3,455

$ 3,455 worth of supplies has been used during the year, so it is considered as supplies expense. And balance in supplies account before adjustment will reduce by $ 3,455 leaving ending balance of $ 1,875.