5. Adjusting Entry: Supplies

in Topic 4(Video 5 of 11)2 min

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An adjusting entry example using Supplies as the account of interest.

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1Not completedCash vs. Accrual Accounting8 min
2Not completedExpense Recognition9 min
3Not completedAccruals and Deferrals16 min
4Not completedWhat is an Adjusting Entry?5 min
5Not completedAdjusting Entry: Supplies
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6Not completedAdjusting Entry: Wages5 min
7Not completedAdjusting Entry: Unearned Revenue3 min
8Not completedAdjusting Entry: Interest3 min
9Not completedContra-accounts5 min
10Not completedDepreciation8 min
11Not completedThe Closing Process11 min

Topic 4Practice Problems

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1Not completedAdjusting Entry IdentificationEasy
2Not completedClosing Journal AccountsEasy
3Not completedRevenue Journal EntryEasy
4Not completedRevenue RecognitionEasy
5Not completedRevenue RecognitionEasy
6Not completedAdjusting Entry - Salaries Payable Moderate
7Not completedAdjusting Entry - Wage ExpenseModerate
8Not completedClosing ProcessModerate
9Not completedDetermining Net Income From Journal EntriesModerate
10Not completedDetermining Net Income From TransactionsModerate
11Not completedPrepaid RentModerate
12Not completedRevenue RecognitionModerate
13Not completedAdjusting Journal EntriesHard
14Not completedAdjusting Journal EntriesHard
15Not completedRevenue and Expense RecognitionHard
16Not completedThe Effect of TransactionsHard
17Not completedWhen You Forget to do Adjusting EntriesHard
18Not completedYear End Closing & Account ClassificationHard
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We're doing another example of adjusting entries, and this time it's gonna be supplies. So let's take a look at supplies and see how that's gonna show up on your test or your quizzes or whatever. On May 1, we purchased $1,000 of supplies. Supplies on hand May 31 were $200. So we're looking for the journal entry for May 31, the adjusting entry. So you see in this one, it doesn't tell us how much we used. I mean, you can figure it out, but it just says how much we have left over. So let's look at a T-account for supplies.

Now, I understand this one's very simple, but you're gonna have ones that aren't so simple. So supplies is an asset. We know that on May 1, we put $1,000 in, and we know that on May 31, we had $200 left over. So that leaves us with an $800 decrease in supplies, right? $1,000 minus $800 is $200. So this is the entry that we need to make. We need to get this $800 on the books. So I always like to start with the original just so I know what I'm dealing with. So May 1, $1,000 into the supplies account.

And just assume we paid for them with cash. So that's our original entry. Then on May 31, $800 of these supplies here have been used up. So that means we have turned what was an asset into an expense. So we're going to call it supplies expense of $800, and we're gonna decrease the supplies account by $800. So we've done a credit to supplies of $800, which matches with this blank that we filled in over here.