Sye Chase started and operated a small family architectural firm in Year 1. The firm was affected by two events:

(1) Chase provided $16,900 of services on account, and

(2) he purchased $6,400 of supplies on account. There were $1,200 of supplies on hand as of December 31, Year 1.

Record the two transactions in the accounts.

1. Accounts Receivables $16900 Dr

Service Revenue $16900 Cr

2. When supplies were purchased, the entry was

Supplies account $6400 Dr

Accounts payable $6400 Cr

At year end on December 31, the entry to adjust supplies is

Supplies expense $5200 Dr

Supplies Account $5200 Cr

Explanation:

1)

The sales were made on account which means they were made on credit. The entry to record credit sales is Accounts receivable debit and the service revenue credit as this revenue has been earned following the accrual basis and the payment against this is due to be received.

2)

The supplies are an asset and when they were purchased on account, the Supplies account is debited while Accounts payable against these supplies are credited as payment for these supplies are yet to be made.

On 31 december, we adjust the supplies account to calculate the supplies that have been used and transfer them to expense account.

The supplies expense is 6400 - 1200 = 5200