During Bruce Company's first year of operations, the company purchased $4,300 of supplies. At year-end, a physical count of the supplies on hand revealed that $1,825 of unused supplies were available for future use. How will the related adjusting entry affect the company's financial statements?

Question

Business

Jaron Conner

23 May, 09:33

During Bruce Company's first year of operations, the company purchased $4,300 of supplies. At year-end, a physical count of the supplies on hand revealed that $1,825 of unused supplies were available for future use. How will the related adjusting entry affect the company's financial statements?

+1

Answers (1)

Know the Answer?

Kody · Answer 1

Supplies Used = $2475

Explanation:

Bruce Company

Supplies Purchases $4,300

Supplies on hand $1,825

Supplies Used = $ 4300 - $ 1825 = $2475

The amount of Supplies used ($ 4300 - $ 1825 = $2475) will be shown in the income statement as an expense and the amount of unused supplies or Supplies on hand $1,825 will be shown in the Balance sheet as an asset account. The both of which will total the supplies actually purchased.

The relating adjusting entry will be

Supplies Expense $ 2475 Debit

Supplies Account $ 2475 Credit

This means the supplies of the amount $ 2475 have been used and is recorded as an expense in the income statement. It will be deducted from the gross profit. The remaining amount $ 1825 is for future use so recorded as an asset in the Balance Sheet and added to the total assets.