Journalizing and posting an adjusting entry for office supplies

On November 1, Carlisle Equipment had a beginning balance in the Office Supplies account of $600. During the month, Carlisle purchased $2,300 of office supplies. At November 30, Carlisle Equipment had $500 of office supplies on hand.

Requirements

1. Open the Office Supplies T-account, and enter the beginning balance and purchase of office supplies.

2. Record the adjusting entry required at November 30.

3. Post the adjusting entry to the two accounts involved, and show their balances at November 30.

Office Supplies T-account

Debit:

Beginning Balance $600

Purchases $2,300

Totals $2,900

Credit:

Ending Balance $500

Used (Balancing Figure) $2,400

Totals $2,900

Adjusting Entry

Supplies Expenses $2,400 (debit)

Office Supplies $2,400 (credit)

Posting Entries.

1. Supplies Expense = $2,400 (Debit Balance)

2. Office Supplies = $500 (Debit Balance)

Explanation:

As the supplies are used during the period, recognize an expense : Supplies Expense and de-recognize the Office Supplies Asset account to the extend of the amount of inventory used during the period.

In other words we are taking out an expense (Increasing it) and decreasing an asset : Office Supplies.