Question :At the beginning of the year, office supplies of \(1,200 were on hand. During the year, Tempo Air Conditioning Service paid \)4,000 for more office supplies. At the end of the year, Tempo has $800 of office supplies on hand. Requirements 1. Record the adjusting entry assuming that Tempo records the purchase of office supplies by initially debiting an asset account. Post the adjusting entry to the Office Supplies and Supplies Expense T-accounts. Make sure to include the beginning balance and purchase of office supplies in the Office Supplies T-account. 2. Record the adjusting entry assuming that Tempo records the purchase of office supplies by initially debiting an expense account. Post the adjusting entry to the Office Supplies and Supplies Expense T-accounts. Make sure to include the beginning balance in the Office Supplies T-account and the purchase of office supplies in the Supplies Expense T-account. 3. Compare the ending balances of the T-accounts under both approaches. Are they the same?

Step by step solution

01

Step-by-Step-SolutionStep1: Explanation on Adjusting Entry

At the end year, adjusting entry of supplies expense will be recorded by debiting supplies expense and crediting office supplies by $4,400 respectively.

02

Calculation of Supplies Expense

Office Supplies Used is calculated as follows:

$$\begin{gathered} \backslash \mathbf{OfficeSuppliesUsed}\mathbf{=}\mathbf{BeginningBalance}+\mathbf{Purchases}-\mathbf{OfficeSuppliesonHand} \\ \mathbf{=}\mathbf{\$}\mathbf{2}\mathbf{,}\mathbf{300}+\mathbf{\$}\mathbf{3}\mathbf{,}\mathbf{000}-\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{000} \\ \mathbf{=}\mathbf{\$}\mathbf{4}\mathbf{,}\mathbf{300} \end{gathered}$$

Unlock Step-by-Step Solutions & Ace Your Exams!

• Full Textbook Solutions

  Get detailed explanations and key concepts

• Unlimited Al creation

  Al flashcards, explanations, exams and more...

• Ads-free access

  To over 500 millions flashcards

• Money-back guarantee

  We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!