Question

-Swifty Company purchased supplies costing $7090 and debited Supplies for the full amount. At the end...

-Swifty Company purchased supplies costing $7090 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $2040 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

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Answer #1

In order to record the existing inventory of supplies, supplies expenses has to be reduced and Supplies inventory (Current asset) has to be increased. This will result in creation of supplies inventory as asset and reduction of supplies expense

Journal Entry

Supplies Inventory     $2,040

    Supplies                          $2,040

(Being remaining supplies recognized in inventory)

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