A company is in its first month of operations. Supplies worth $4,000 were purchased on January 5. At the end of the month supplies worth $3,000 were in hand. What adjusting entry would be made at the end of January?

Question

Business

Adam Morris

10 February, 19:23

A company is in its first month of operations. Supplies worth $4,000 were purchased on January 5. At the end of the month supplies worth $3,000 were in hand. What adjusting entry would be made at the end of January?

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Zain Parsons · Answer 1

Adjustying Entry at the end of January

Dr. Cr.

Supplies Expense Account $1,000

Supplies Inventory Account $1,000

Explanation:

Opening supplies = 0 (First month of operation)

Purchases on January 5 = $4,000

Supplies on January 31 = $3,000

Closing Inventory = Opening Inventory + Purchase during the month - Expense for the month

$3,000 = $0 + $4,000 - Expense for January

Expense for January = $4,000 - $3,000 = $1,000