Somerville Corp. purchases office supplies once a month and prepares monthly financial statement. The asset account Office Supplies on Hand has a balance of $1,450 on May 1. Purchase of supplies during May amount to $1,100. Supplies on hand at May 31 amount to $920. Prepare the necessary adjusting entry on Somerville's books in May 31.





I spent so much time on this and no not know how to journalize this. Can anybody please help me out here?

Ail Bane

I think you would have to subtract $1,100 - $920 = $180 which is the amount of supplies used up during march.

I not an expert but I think it would look something like this.

DR. Supplies $1,100
CR. Cash $1,100

DR. Supply Expense $180
CR. Office Supplies $180

CaptainForest

On May 1 we had a total of $1,450 in supplies.

We bought an additional $1,100 during the month.

At the end of the month we only had $920 left.

But 1,450 + 1,100 = $2,550

So where did the 2,550 – 920 = $1,630 of supplies go? We used them up in the business!

So we need to devalue our supplies account from 2,550 to 920.

Dr. Supplies Expense 1,640
Cr. Supplies 1,640