Question

at the beginning of december, coastal corporation had $2,100 in supplies on hand. during the month, supplies purchased amounted to $3,400, but by the end of the month the supplies balance was only $1,500. what is the appropriate month-end adjusting entry?

Answer 1

To make the appropriate month-end adjusting entry for supplies, you need to account for the supplies used during the month and adjust the balance accordingly. Here's how you can calculate it:

1. Start with the beginning balance of supplies on hand: $2,100.
2. Add the supplies purchased during the month: $3,400.
3. This gives you the total supplies available during the month: $2,100 (beginning balance) + $3,400 (purchases) = $5,500.

Now, you need to account for the ending balance, which is $1,500.

4. Calculate the supplies used during the month: $5,500 (total supplies available) - $1,500 (ending balance) = $4,000.

So, $4,000 worth of supplies were used during the month. To make the adjusting entry, you should debit the Supplies Expense account for $4,000 and credit the Supplies account for the same amount. This reflects the supplies that have been used up and reduces the asset (Supplies) on the balance sheet while recognizing the expense on the income statement. The journal entry looks like this:

- Debit: Supplies Expense $4,000
- Credit: Supplies $4,000

This entry reflects the reduction in the supplies asset due to consumption during the month.