On June 1, during its first month of operations, Crooked Rain purchased supplies for $4,500 and debited the supplies account for that amount. At June 30, an inventory of supplies showed $1,000 of supplies on hand. What adjusting journal entry should be made for June?

Question

Business

Allan Mcgee

8 March, 19:26

On June 1, during its first month of operations, Crooked Rain purchased supplies for $4,500 and debited the supplies account for that amount. At June 30, an inventory of supplies showed $1,000 of supplies on hand. What adjusting journal entry should be made for June?

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Answers (1)

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Meredith Galloway · Answer 1

Debit supplies expense $3,500

Credit Supplies $3,500

Explanation:

Adjusting entries are used to recognise the revenues and expenses that are realised by a business in a given accounting period. So at the end of the accounting period these entries are made to determine the income position of the business.

Inventory of $4,500 was bought and debited from Supplies account on June 1st, on June 31st the balance of inventory is $1,000.

This means supplies sold out is 4,500 - 1,000 = $3,500

$3,500 will be credited to Supplies account and it's balance will now be $1,000 to tally with goods on hand.

A debit is passed to supplies expense of $3,500 to recognise expense incurred.