Question

Jenning Co. adjusts its books each month but closes its books at the end of the year. The trial balance at July 31 before adjustments is as follows:

Debit
Cash $12,920
Accounts Receivable $9,620
Supplies $1,400
Prepaid Insurance $3,120
Equipment $26,000

Credit
Accumulated Depreciation—Equipment $10,400
Unearned Service Revenue $6,500
Capital Stock $7,190
Retained Earnings $23,500

Debit
Dividends $1,560

Credit
Service Revenue $16,510

Debit
Wages and Salaries Expense $7,800
Utilities Expense $380
Rent Expense $1,300

Total Debit: $64,100
Total Credit: $64,100

Refer to the trial balance for Jenning Co.

On July 31, the amount of supplies on hand is $520. What amount is reported in the July income statement for supplies expense?
a. $1,920
b. $520
c. $880
d. $1,400

Answer 1

The amount reported in the July income statement for supplies expense is $880.

Step-by-step explanation:

The amount reported in the July income statement for supplies expense is $880.

Supplies on hand at the end of the month are valued at $520. We can calculate the amount of supplies used during the month by finding the difference between the initial supplies balance ($1,400) and the supplies on hand at the end of the month ($520):

Supplies used = Initial supplies balance - Supplies on hand at end

Supplies used = $1,400 - $520 = $880