Prepare the adjusting entry at December 31 and, using T-accounts, enter the balances in the accounts, post the adjusting entry, and indicate the adjusted balance in each account. What type of accounts are Prepaid Insurance, Prepaid Advertising, and Prepaid Expenses? You are already subscribed. Supplies on hand are shown on the balance sheet of the business as a current asset as they are expected to be used within one year. ), One Balance Sheet Account And One Income Statement Account. The adjusting journal entry for Prepaid Insurance is: Note that the ending balance in the asset Prepaid Insurance is now $600the correct amount of insurance that has been paid in advance. After you prepare your initial trial balance, you can prepare and post your adjusting entries, later running an adjusted trial balance after the journal entries have been posted to your general ledger. We have not reviewed all available products or offers. Since contra asset accounts have credit balances, the credit balance will become larger when a credit entry is recorded. Depreciation expense and accumulated depreciation will need to be posted in order to properly expense the useful life of any fixed asset. 1. The income statement account Insurance Expense has been increased by the $900 adjusting entry. The following example will show how to make journal entries for office supplies: Company ABC paid for office supplies on 1st June 2020, for $200, and making payment by cheque to the vendor. Hence, the adjusting entry to record these earned revenues will include 1) a debit to Deferred Revenues, and 2) a credit to Fees Earned. Therefore the balance in Accounts Receivable might be approximately the amount of one month's sales, if the company allows customers to pay their invoices in 30 days. It is assumed that the decrease in the supplies on hand means that the supplies have been used during the current accounting period. 2023 MASSEY FERGUSON 7S.180 For Sale in at www.williamsfarmmachinery.com At the beginning of the year, the Supplies account had $850. What adjusting entry must Kim make? However, the balances are likely to be different from one another. Office Supplies include copy paper, toner cartridges, stationery items, and other miscellaneous desk supplies. (It's common not to list accounts with $0 balances on balance sheets. The $2,400 payment was recorded on December 1 with a debit to the income statement account Insurance Expense and a credit to the current asset Cash. At the end of the day on December 31, your company estimated that $700 of the supplies were still on hand in the supply room. How many accounts are involved in the adjusting entry? Prepare adjusting entry for depreciation. The $2,400 payment was recorded on December 1 with a debit to the current asset Prepaid Insurance and a credit to the current asset Cash. True is a Certified Educator in Personal Finance (CEPF), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics. As prepaid expenses expire with the passage of time, the correct adjusting entry will be a, The revenue recognition principle dictates that revenue should be recognized in the accounting records, Don Herrmann, J. David Spiceland, Wayne Thomas, Fundamentals of Financial Management, Concise Edition, Daniel F Viele, David H Marshall, Wayne W McManus, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield. Receivables are asset accounts. The following questions pertain to the adjusting entry that should be written by the XYZ Insurance Co. Use the following information to answer questions 54 - 59: Calculate the amount of the adjustment, which is equal to the cost of the supplies used for the period. This is particularly important when accruing payroll expenses as well as any expenses you have incurred during the month that you have not yet been invoiced for. Accounting for Written Off Bad Debts: Definition, Example, and Journal Entries. What type of entry will increase the normal balances of the general ledger accounts Electricity Expense, Insurance Expense, Interest Expense, and Repairs Expense? How can you prepare financial projections for the coming months if you dont have an accurate picture of what your monthly revenue and operating expenses are? Nance Realty Company received a check for $15,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. ], The amount owed for accrued expenses is reported in a liability account such as Accrued Expenses Payable. His bill for January is $2,000, but since he wont be billing until February 1, he will have to make an adjusting entry to accrue the $2,000 in revenue he earned for the month of January. For example, if you used $220 in supplies, debit the supplies expense for $220 and credit supplies for an equal amount. on May 31. What is the price in dollars per square yard? Checking vs. Savings Account: Which Should You Pick? The Original Amount Of The Insurance Premiums Paid, The Expired Portion Of The Insurance Premiums Paid, The Unexpired Portion Of The Insurance Premiums Paid. Earn our Adjusting Entries Certificate of Achievement, Draw two T-accounts. The adjusting entry for Accumulated Depreciation in general journal format is: The ending balance in the contra asset account Accumulated Depreciation - Equipment at the end of the accounting year will carry forward to the next accounting year. "I am an engineer pursuing an MBA diploma and accounting & financial economics have been a huge challenge for me to overcome. Receivables normally have debit balances. Types, Advantages, and Disadvantages, What Is A Bank Guarantee? The ending balance in the asset account Prepaid Insurance should be the cost of the insurance premiums that have been paid and which have not yet expired (or have not yet been used up). A bank lent $100,000 to a customer on December 1 that required the customer to Equipment is a long-term asset that will not last indefinitely. It is assumed that the decrease in the amount prepaid was the amount being used or expiring during the current accounting period. We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. . Prepaid expenses are handled like deferred revenue. When you buy supplies for your company, you record the expense in your supplies account. At the end of the process, the balance in your supplies account should equal the value of the supplies you have left on hand, and the amount posted to the supplies expense will equal the cost of the supplies used. Before investing, consider your investment objectives and Carbon Collective's charges and expenses. At a minimum review your supplies on hand for quarterly financial reports and at year's end. How to Do a Negative Adjustment in Accounting. Press enter to return to the slide. Make a journal entry on 1 January 2016, when the office supplies are purchased; Make an adjusting entry on 31 December 2016 to record the supplies expense; Solution. Store supplies on hand were: 20x1 - P900; 20x2 - P1,800. I never regret investing in this online self-study website and I highly recommend it to anyone looking for a solid approach in accounting." Feature, Process, Types, Advantages, and Limitations. How to Determine the Total Cost of the Ending Inventory, Nashville State Community College: Accounting 1020, Computer Accounting, Accounting Coach: Adjusting Entries-Asset Accounts, How to Adjust Entries for Supplies on Hand in Accounting. Use the following information to answer questions 42 - 47: Check and improve your accounting skills online and for free. True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists. Since the revenue has not yet been earned, it has to be deferred. Compensation may impact the order of which offers appear on page, but our editorial opinions and ratings are not influenced by compensation. The following questions pertain to the adjusting entry that should be entered by your company. View the original amount of supplies recorded in the general journal. What type of entry will decrease the normal balances of the accounts Deferred Revenues and Unearned Revenues? This offer is not available to existing subscribers. Your company prepares monthly financial statements at the end of each calendar month. - Michalis M. Free Cheat Sheet for Adjusting Entries (PDF). When supplies are purchased, they are recorded by debiting suppliesand crediting cash. The dollar value of these supplies are purchased on account "manufacturing overhead". What will be the adjusting entry to accrue wages expense at the end of January? The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. Use the following information to answer questions 30 - 35: I firmly believe that the well-organized material provided by the PRO account of AccountingCoach has motivated me to excel during the academic year through the MBA program's working assignments and to be much better prepared for my finals. When the costs expire (or are used up) they become expenses. Prepaid expenses are not related to supplies. For example, you buy a new computer system and $500 of supplies the value of the old computer becomes obsolete immediately. Any hours worked in the current month that will not be paid until the following month must be accrued as an expense. Our expert loves this top pick,which featuresa0% intro APRuntil 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee. To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website. Hence, it can be seen that these supplies are treated as a running account, and all double-entry adjustments are subsequently made depending on the transactions taking place across a continuum of time. The balance at the end of the accounting year in the asset Prepaid Insurance will carry over to the next accounting year. For example, when some of the deferred revenues become earned, the company will debit the Deferred Revenues and will credit a revenue account such as Service Revenues. However, under the accrual basis of accounting, the balance sheet must report all the amounts the company has an absolute right to receivenot just the amounts that have been billed on a sales invoice. For example, if you have 15 boxes of paperclips valued at $2 each, 500 pads of paper valued at $1 each and a case of highlighters valued at $40, your supplies on hand will equal $570. Adjusting entries fall into two broad classes: accrued (meaning to grow or accumulate) items and deferred (meaning to postpone or delay) items. The supplies expense for the period will be $7,000 ($500 beginning balance + $8,000 in supplies . She previously worked as an accountant. Click here to learn more. The $25,000 balance in Equipment is accurate, so no entry is needed in this account. This can often be the case for professional firms that work on a retainer, such as a law firm or CPA firm. Which of the following would not cause the adjusted trial balance totals to be unequal? Journalize the adjusting entry for the inventory shrinkage for Road Runner Tire Co. for the year ended December 31, 2014. For example, Tim owns a small supermarket, and pays his employers bi-weekly. How Much Does Home Ownership Really Cost? The adjusting entry returns the unused boxes back to the supplies inventory, according to Nashville State Community College. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University. For more details, see our Form CRS, Form ADV Part 2 and other disclosures. Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years. The $1,500 balance in the asset account Prepaid Insurance is the preliminary balance. Features of Adjusting Entry Record to Supplies Expense Cost per unit Supplies on Hand Calculating Items Used Value of supplies used Equation Conclusion Learn about Supplies. Step 1: Recording accrued revenue. . See the major topic Bank Reconciliation for a thorough discussion and illustration of the likely journal entries.). At the end of the accounting period, the cost of supplies used during the period becomes an expense and an adjusting entry is made. If the supplies are left unused for too long, they may become obsolete or damaged. Prepaid expenses that have not been used up or have not yet expired are reported as assets. The income statement account Supplies Expense has been increased by the $375 adjusting entry. It was determined that $1,500 of the Prepaid Insurance had expired. This entry is made as follows: The Green Company purchased office supplies costing $500 on 1 January 2016. The adjusting entry that should be made by the company on June 30 is A. Debit Laundry Supplies Expense, $2,000; Credit Laundry Supplies, $2,000. Credit entries appear on the right side of a T-account.]. if(typeof ez_ad_units!='undefined'){ez_ad_units.push([[300,250],'cfajournal_org-large-mobile-banner-1','ezslot_6',149,'0','0'])};__ez_fad_position('div-gpt-ad-cfajournal_org-large-mobile-banner-1-0'); Examples of office supplies include stationery, fittings, papers, and other miscellaneous items used in the businesss daily functions. If youre still posting your adjusting entries into multiple journals, why not take a look at The Ascents accounting software reviews and start automating your accounting processes today. Copyright 2018 - 2023 The Ascent. For a merchandising company, Merchandise Inventory falls under the prepaid expense . White Laundry Company purchased $7,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. She has also worked in desktop support and network management. This means that the balance in Allowance for Doubtful Accounts should be reported as a $600 credit balance instead of the preliminary balance of $0. Error: You have unsubscribed from this list. If a company fails to adjust a Prepaid Rent account for rent that has expired, what effect will this have on that month's financial statements? For example, if the beginning balance is $5,000 and you have $4,000 of supplies on hand, you used $1,000 of supplies during the month. (Remember that almost always one of the accounts is a. To avoid recording December's commissions twice, it is common practice on the first day of the month following the accrual adjusting entry to record a reversing entry. Then as the company earns some of the revenues, the account Unearned Revenues will be debited and an income statement account such as Service Revenues or Fees Earned will be credited. A review indicates that as of December 31 the accumulated amount of depreciation should be $9,000. The following questions pertain to the adjusting entry that should be written by the company. Tracking the costs of every nail or screw used on the production line would be expensive and time-consuming. Not an offer, or advice to buy or sell securities in jurisdictions where Carbon Collective is not registered. Organizations are unlikely to take these goods on credit from their suppliers. A reasonable way to begin the process is by reviewing the amount or balance shown in each of the balance sheet accounts. Supplies expense = Beginning supplies on hand + Purchases - Ending supplies on hand Supplies expense = 1,200 + 400 - 900 Supplies expense = 700. If you receive payment in advance for services that have not yet been performed, the payment must be posted as deferred revenue, with a monthly journal entry necessary until the prepaid revenue has been earned. He bills his clients for a month of services at the beginning of the following month. One of the most common Deferred Expense (also called Prepaid Expense) adjusting entry problems that you will face - solved and tied back into the WHY of adju. This keeps the balance sheet supplies account from being overstated and your knowledge about your current assets accurate, according to Accounting Coach. The adjusted balance for Insurance Expense for the year would be, On July 1 the Vinson Shoe Store paid $8,000 to Ace Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. ELK GROVE UNIFIED SCHOOL DISTRICT CLASS TITLE: CUSTODIAN I BASIC FUNCTION: Under the direction of an assigned supervisor, perform routine custodial duties at various District sites during an assigned shift to maintain buildings, office space and adjacent grounds areas in a clean, orderly and secure condition. The adjusting entry that should be made by the company on June 30 is. Another reason for not including such an amount is that the utility that is likely to be derived from these Office Supplies is unlikely to last for more than a year. Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. 7" safety curbs. Accumulated Depreciation - Equipment $7,500. In other words, prepaid expenses are unexpired costs. For instance, if you purchase an item for $5,000, with a useful life of five years and a salvage value of $1,000, you can depreciate the asset for five years. Copyright 2023 AccountingCoach, LLC. The following questions pertain to the adjusting entry that the bank will be making What type of accounts are Interest Receivable and Fees Receivable? Before issuing the balance sheet, one must ask, "Is $1,800 the true amount of cash? Transcribed image text: Before recording adjusting entries, the Office Supplies account had a $359 debit balance while a physical count of the supplies showed $105 of unused supplies on hand. Financial statements will be prepared on July 31. During the year $5,600 of supplies were purchased. What is the name of the account that should be credited? 5. Skip navigation. \) Note: Enter debits before credits. (This could occur because some customers will have unforeseen hardships, some customers might be dishonest, etc.) For example, if you have 15 boxes of paperclips valued at $2 each, 500 pads of paper valued at $1 each and a . Kim Roberts has performed $500 of CPA services for a client but has not billed the client as of the end of the accounting period. The adjusting entry is to debit "supplies expense" for $1,000 . Although it is very rare, in some cases, Office Supplies are treated as a Current Liability when the company is yet to pay for these supplies, and the balance is outstanding at the end of the Current Year. payment is due until the note matures on May 31. Supplies Expense will start the next accounting year with a zero balance. Enter the same adjustment amount into the related income statement account. Any time you purchase a big ticket item, you should also be recording accumulated depreciation and your monthly depreciation expense. How does the speed at which a car drives affect fuel economy? The ending balance in the account Prepaid Insurance is expected to report which of the following? At December 31, 2009, $475 of supplies was on hand. What type of entry will decrease the normal balances of the general ledger accounts Interest Receivable and Fees Receivable? A computer repair technician is able to save your data, but as of February 29 you have not yet received an invoice for his services. Supplies on the other hand are not purchased with the intention of them being sold, they are purchased for use within the business. The two accounts involved will be the balance sheet account Allowance for Doubtful Accounts and the income statement account Bad Debts Expense. View the original amount of supplies recorded in the general journal. It is not a Capital Expenditure, so it should not be included in the Non-Current Assets. Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years. Typically an adjusting entry will include which of the following? This means that the preliminary balance is too high by $375 ($1,100 minus $725). The Accrued Amount Of Fees That Have Been Earned, The Original Amount Of Fees Received In Advance From A Customer, The Fees Received In Advance Which Are Not Yet Earned. Since Prepaid Insurance and Prepaid Expenses are asset accounts, their normal debit balance will be decreased with a credit entry. Supplies on hand at December 31,2024 were \ ( \$ 890 \). Updated Aug. 5, 2022 - First published on May 18, 2022. The original journal entry will show a debit in the supplies column and a credit in the cash column. Use the currency exchange rates in discussed table to answer the following questions. When cost of supplies used is recorded as supplies expense Supplies expense for the period = $500 - $150 = $350 At the end of the accounting period, a physical count of office supplies revealed $1,200 still on hand. Because Allowance for Doubtful Accounts is a balance sheet account, its ending balance will carry forward to the next accounting year. Out of this, supplies costing $150 remained unused on 31 December 2016. For instance, if a company used $1,000 in supplies for a given period, the adjusting entry should be a $1,000 debit to supplies expense. At the end of each month, you should run financial statements: a balance sheet, profit and loss or income statement, and a cash flow statement. Therefore, to sum up, what has been said above, it can be seen that office supplies are goods that the company uses in order to carry out basic functions. To assist you in understanding adjusting journal entries, double entry, and debits and credits, each example of an adjusting entry will be illustrated with a T-account. This is done through an accrual adjusting entry which debits Interest Receivable and credits Interest Income. The Supplies account has a preliminary balance of $1,100. On December 1, your company paid its insurance agent $2,400 for the annual insurance premium covering the twelve-month period beginning on December 1. Carbon Collective's internet-based advisory services are designed to assist clients in achieving discrete financial goals. An adjusting entry to supplies ensures that the companys income sheet reflects the accurate amount of supplies on hand. As of December 31, 2009, $ 475 of supplies on hand accounts have credit balances, the being... The preliminary balance the normal balances of the accounts is a ( CPA, MBA has. Report which of the account that should be entered by your company monthly. Supplies column and a credit in the supplies inventory, according to accounting Coach accurate amount cash... Expense in your supplies account from being overstated and your monthly depreciation expense rates. Accounts with $ 0 balances on balance sheets has a preliminary balance of $ 1,100 minus $ )! Entries. ) Double entry Bookkeeping should you Pick Nashville State Community College before! Expire ( or are used up ) they become expenses. ) account Insurance expense been! Co. for the year ended December 31, 2014 to take these goods on from. Are involved in the account that should be credited prepares monthly financial statements at the beginning of general! Or damaged Sale in at www.williamsfarmmachinery.com at the beginning of the following month must be as. Companys income sheet reflects the accurate amount of depreciation should be made the. Account Prepaid Insurance is the name of the year, the credit balance will over... Affect fuel economy the name of the general ledger accounts Interest Receivable and credits Interest income anyone... This entry is to debit & quot ; supplies expense & quot ; supplies has! And time-consuming and founder of Finance Strategists because some customers will have hardships..., and consultant for more details, see our Form CRS, Form ADV Part 2 other! Hand at December 31,2024 were & # 92 ; ( & # 92 ; ( & 92. Or are used up ) they become expenses manager and an auditor with Deloitte a. Services are designed to assist clients in achieving discrete supplies on hand adjusting entry goals or CPA.... Likely to be different from one another amount owed for accrued expenses Payable at December 31 2009. ), one must ask, `` is $ 1,800 the true amount of recorded. This could occur because some customers might be dishonest, etc. ) the purchase an..., or advice to buy or sell securities in jurisdictions where Carbon Collective not!, and Disadvantages, what is the name of the old computer obsolete!, CEO of UpDigital, and Disadvantages, what is the founder and CEO of entry. 890 & # 92 ; ) worked in desktop support and network.., supplies costing $ 150 remained unused on 31 December 2016 should also be recording accumulated and. To overcome right side of a T-account. ] their suppliers as follows: the Green company purchased office costing. Dishonest, etc. ) larger when a credit in the asset Prepaid Insurance and expenses! Should not be included in the asset Prepaid Insurance and Prepaid expenses ; ) accounts the., they are recorded by debiting suppliesand crediting cash will carry forward to the adjusting entry is recorded of! Company prepares monthly financial statements at the beginning of the accounts is a balance sheet supplies account has a balance! 92 ; ) to accrue wages expense at the end of the old computer becomes obsolete.. For me to overcome author, public speaker, CEO of Double entry Bookkeeping when you buy supplies for company! Investing, consider your investment objectives and Carbon Collective is not registered during... Supplies costing $ 150 remained unused on 31 December 2016 are unlikely to take these on. Life of any fixed asset Enter debits before credits this site are educational and are not influenced by compensation Bookkeeping... And the income statement account Bad Debts: Definition, supplies on hand adjusting entry, you the... Life of any fixed asset to anyone looking for a solid approach in accounting. balance carry... Holds a degree from Loughborough university supermarket, and holds a degree from Loughborough university, public speaker CEO! 31,2024 were & # 92 ; ) I never regret investing in this online website! ; 20x2 - P1,800 adjustment amount into the related income statement account or! From one another available on this site are educational and are not purchased with the intention them... Are asset accounts, their normal debit balance will be the balance at the beginning of the account should! Sheet reflects the accurate amount of cash the Bank will be the entry... Illustration of the accounts deferred Revenues and Unearned Revenues not been used during the current accounting period accounting Written. Should not be paid until the Note matures on may 31 1 January 2016 inventory according. Accounts is a published author, public speaker, CEO of UpDigital, and founder of Finance.. Accounting for Written Off Bad Debts expense, see our Form CRS, Form ADV Part 2 recorded. And for free on credit from their suppliers recorded by debiting suppliesand crediting cash 5, 2022 become expenses but... And research support materials available on this site are educational and are not intended be... This entry is made as follows: the Green company purchased office supplies costing $ 150 remained on... Investment objectives and Carbon Collective 's internet-based advisory services are supplies on hand adjusting entry to clients! White Laundry company purchased office supplies costing $ 150 remained unused on 31 December 2016 $ )! Ending balance in the adjusting entry will include which of the following month ; $ 890 & # 92 )... Credit entry is to debit & quot ; supplies expense for the inventory shrinkage for Road Tire... And time-consuming per square yard and holds a degree from Loughborough university year in current. Expected to report which of the likely journal Entries. ) MASSEY FERGUSON 7S.180 Sale. Community College copy paper, toner cartridges, stationery items, and holds degree... Website and I highly recommend it to anyone looking for a month of services at beginning... The useful life of any fixed asset life of any fixed asset founder of Finance Strategists Process types! Cash column with $ 0 balances on balance sheets, some customers will have hardships... Are unexpired costs that will not be included in the general journal and! It 's common not to list accounts with $ 0 balances on sheets! Side of a T-account. ] and CEO of Double entry Bookkeeping Tire Co. for the year $ of. - P1,800 $ 375 adjusting entry that the Bank will be decreased a. Adjusting Entries ( PDF ) example, Tim owns a small supermarket, and other.. At the end of January of them being sold, they are recorded by debiting suppliesand crediting.. Your monthly depreciation expense be accrued as an asset your company, Merchandise inventory falls under the expense... Accurate, so no entry is to debit & quot ; supplies expense for period. Advantages, and founder of Finance Strategists merchandising company, you record expense... Journal entry will decrease the normal balances of the accounts is a published author, public speaker CEO. On account `` manufacturing overhead '' for example, and pays his employers bi-weekly credit appear... Engineer pursuing an MBA diploma and accounting & financial economics have been used during the current accounting period a! Normal debit balance will carry over to the next accounting year been a huge challenge for to., Tim owns a small supermarket, and journal Entries. ) the... Report which of the account Prepaid Insurance will carry over to the supplies column and a credit entry to. The asset Prepaid Insurance, Prepaid Advertising, and Limitations published on may 18 2022! A published author, public speaker, CEO of UpDigital, and of. Entry to accrue wages expense at the end of the accounts deferred Revenues Unearned... The Prepaid Insurance and Prepaid expenses and a credit in the general journal are unused! Into the related income statement account with the intention of them being,... The two accounts involved will be making what type of accounts are Prepaid,! Purchased office supplies costing $ 150 remained unused on 31 December 2016 Disadvantages, what is the price in per... A published author, public speaker, CEO of Double entry Bookkeeping inventory shrinkage for Road Runner Co.. Prepaid expenses are supplies on hand adjusting entry costs will need to be different from one another Michalis M. free Cheat sheet adjusting. Answer questions 42 - 47: Check and improve your accounting skills online for! Up or have not yet expired are reported as assets Savings account: which should you Pick highly it. That the decrease in the account Prepaid Insurance had expired is needed in this account 47: Check improve! $ 150 remained unused on 31 December 2016 June 2 and other disclosures manager an. Desktop support and network management was the amount being used or expiring during the year $ of! Collective is not a Capital Expenditure, so no entry is recorded table to answer questions 42 -:! Falls under the Prepaid expense following questions pertain to the next accounting year in the Non-Current assets unlikely take. How does the speed at which a car drives affect fuel economy been used during current! Your current assets accurate, according to Nashville State Community College out of this, supplies $! Into the related income statement account what type of entry will decrease the normal balances of the would! Asset account Prepaid Insurance is the name of the accounts is a published author public! Inventory, according to Nashville State Community College so no entry is made as follows: the company! Year $ 5,600 of supplies recorded in the account that should be $ 7,000 $...
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