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2 November, 16:17

Henna Hair Salon purchased supplies for $6,000 and debited Supplies for the full amount. At the end of the accounting period, $1,800 worth of supplies were still on hand. Identify the adjusting entry needed at the end of the period.

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  1. 2 November, 17:40
    0
    Cost of goods sold = $6,000 - $1,800 = $4,200

    Closing Inventories = $1,800

    Explanation:

    $

    Purchase supplies 6,000

    Closing inventories (1,800)

    Cost of goods sold 4,200

    Hence, cost of sales will be $4,200 under income statement while closing inventory of $1,800 will be recorded under current assets in the Balance sheet.
  2. 2 November, 18:38
    0
    Debit Supplies expense $4,200

    Credit Supplies (B/s) $4,200

    Explanation:

    When the purchase was done, the entries posted would have been;

    Debit Supplies (B/s) $6,000

    Credit Cash account $6,000

    Being entries to recognize purchase of supplies.

    At the end of the accounting period, $1,800 worth of supplies were still on hand then, cost of supplies utilized

    = $6,000 - $1,800

    = $4,200

    The adjusting entry needed at the end of the period would be

    Debit Supplies expense $4,200

    Credit Supplies (B/s) $4,200

    Being entries to recognize the supplies used up.
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