Iron Horse Printing Services purchased $1,000 of printing supplies for cash, recording the transaction using the alternative treatment for deferred expenses. At the end of the year, Iron Horse had $300 of printing supplies remaining. Record the journal entry for the purchase of printing supplies and the adjusting entry for printing supplies not used.
Journal entries are as follows:
Accounts and Explanation
To record the purchase of supplies
To record ending supplies
Adjusting entries are recorded at the end of the accounting period, to record the earned revenues and incurred expenses.
To record deferred expense, purchase of office supplies will be recorded by debiting supplies expense and crediting cash by $1,000. At the end of the period, ending balance of office supplies will be recorded by debiting printing supplies and crediting supplies expense by $300.
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