Question

Answers in journal entry for event “a” is incorrect. Please correct.

Record the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by entering the account name and amount and indicating whether it is an addition (+) or subtraction (-). Column headings reflect the expanded balance sheet equation; items that affect net income should not be shown as affecting stockholders' equity. The first transaction is provided as an illustration. a. During the month, the Supplies (asset) account was debited $1,900 for supplies purchased. The cost of supplies used during the month was $1,150. Record the adjustment to properly reflect the amount of supplies used and supplies still on hand at the end of the month. b. An insurance premium of $420 was paid for the coming year. Prepaid Insurance was debited. c. Wages of $3,450 were paid for the current month. d. Interest revenue of $240 was received for the current month. e. Accrued $690 of commissions payable to sales staff for the current month. f. Accrued $160 of interest expense at the end of the month. g. Received $2,350 on accounts receivable accrued at the end of the prior month. h. Purchased $660 of merchandise inventory from a supplier on account i. Paid $140 of interest expense for the month. j. Accrued $860 of wages at the end of the current month. k. Paid $550 of accounts payable. Required: a. Indicate the financial statement effect. b. Prepare the journal entry for the above transactions.

Answer 1

there are two situation in the transaction provided in (a),that is firstly we required to pass entry for purchase of supplies and second entry should be passed at the end of the period inorder to reflect the cost o supplies used and to show balance of supllies in hand.

1)entry for purchase of supplies:-

supplies on hand a/c dr 1900

to cash/bank a/c 1900

2)at the end of the month,the entry will be

supplies expense a/c dr 150

to supplies on hand a/c 150.

now from the above two entries,we can understand that the total supplies used during the month is $150 and supplies balance in hand is $1750(1900-150).