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31E_2

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Horngren'S Financial And Managerial Accounting
Found in: Page 169

Short Answer

Question :At the beginning of the year, office supplies of $1,200 were on hand. During the year, Tempo Air Conditioning Service paid $4,000 for more office supplies. At the end of the year, Tempo has $800 of office supplies on hand. Requirements 1. Record the adjusting entry assuming that Tempo records the purchase of office supplies by initially debiting an asset account. Post the adjusting entry to the Office Supplies and Supplies Expense T-accounts. Make sure to include the beginning balance and purchase of office supplies in the Office Supplies T-account. 2. Record the adjusting entry assuming that Tempo records the purchase of office supplies by initially debiting an expense account. Post the adjusting entry to the Office Supplies and Supplies Expense T-accounts. Make sure to include the beginning balance in the Office Supplies T-account and the purchase of office supplies in the Supplies Expense T-account. 3. Compare the ending balances of the T-accounts under both approaches. Are they the same?

Adjusting entries are as follows:

Date

Accounts and Explanation

Debit

Credit

Supplies Expense

$400

Office Supplies

$400

To record office supplies used.

T accounts are as follows:

Office Supplies

$1,200

$400

Bal.

$800

Supplies Expense

$4,000

400

Bal.

$4,400

See the step by step solution

Step by Step Solution

Step-by-Step-SolutionStep1: Calculation of Actual Office Supplies Used

Actual Office Supplies Used is calculated as follows:

Step 2: Calculation of Adjustment for Office Supplies Used

Adjustment for Office Supplies Used is calculated as follows:

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