Chapter 3, Problem 6QS

Prepaid (deferred) expense adjustments P1

For each separate case below, follow the three-step process for adjusting the supplies asset account at December 31. Step 1: Determine what the current account balance equals. Step 2. Determine what are the current account balance should equal. Step 3. Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year.

1. Supplies. The Supplies account has a $300 debit balance to start the year. No supplies were purchased during the current year. December 31 physical count shows $110 of supplies remaining,
2. Supplies. The supplies account has an $800 debit balance to start the year. Supplies of $2,100 were purchased during the current year and debited to the Supplies account. A December 31 physical count shows $650 of supplies remaining.
3. Supplies. The Supplies account has a$4,000 debit balance to start the year. During the current year, supplies of $9,400 were purchased and debited to the Supplies account. The inventory of supplies at December 31 totaled $2,660.