Adjusting entries with deferrals: Problem type 2 On June 1,...

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Adjusting entries with deferrals: Problem type 2 On June 1, Ward Company purchased $2,900 of supplies on account. On June 1, Ward Company debited Supplies Expense , which is an alternate way of recording the initial expenditure. By the end of the calendar year, $620 of supplies was used. Required: Journalize the adjusting entry on December 31.
Since Supplies Expense was debited when the supplies were initially purchased, the amount of supplies remaining, $2,280, will be used in the future years and should be capitalized this year. The adjusting entry moves $2,280 out of the Supplies Expense account and into the Supplies account, leaving the correct amount used in the Supplies Expense account. Credit Supplies Expense:
Supplies Expense, an expense account, is credited (decreased) for the amount of the unused supplies, $2,280, leaving the correct balance in the expense account.
Supplies Supplies Expense 2,280
Required: Journalize the adjusting entry on December 31.

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