Question

ABC Corp. purchased $9,010 worth of laundry supplies on June 2, and recorded purchase as an asset. On june 30, there was only $1,590 of inventory on hand. The adjustment that should be made by the company on June 30 is...

Answer 1

ABC Corp. must adjust their records on June 30 by recognizing a Supplies Expense of $7,420 and reducing the Supplies Asset account by the same amount to reflect the consumption of supplies.

Step-by-step explanation:

ABC Corp. purchased $9,010 worth of laundry supplies on June 2 and recorded the purchase as an asset. By June 30, the inventory on hand was only $1,590. To accurately reflect the consumption of supplies during the month, an adjustment should be made to the financial records. The company initially recorded the entire purchase as an asset. Since part of this asset has been used up, the company needs to recognize this as an expense.

• he adjustment needed on June 30 is to recognize the expense for the laundry supplies used during the month. This adjustment is typically recorded using the adjusting entry for the usage of supplies. The entry would be:

• Debit Supplies Expense: This represents the expense incurred for the laundry supplies used during June. The amount is calculated as the initial purchase cost minus the remaining supplies on hand.

• Debit Supplies Expense

• =

• Initial Purchase Cost

• −

• Remaining Supplies on Hand

• Debit Supplies Expense=Initial Purchase Cost−Remaining Supplies on Han
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