Question

Please refer to the following exercise to demonstrate the above objectives. In addition, please show your calculations in the threads and assist others who may have challenges by discussing your analysis and calculations;

1) Adjustment for Supplies:

Answer each of the following independent questions concerning supplies and the adjustment for supplies.

a) The balance in the supplies account, before adjustment at the end of the year, is $3,500. What is the amount of the adjustment if the amount of supplies on hand at the end of the year is $1,100?

b) The supplies account has a balance of $650, and the supplies expense account has a balance of $1,950 at the end of the first year of operations. What was the amount of supplies purchased during the year?

2) Adjustment for Prepaid Insurance:

The prepaid insurance account had a balance of $9,600 at the beginning of the year. The account was increased for $28,800 for premiums on policies purchased during the year. What is the adjustment required at the end of the year for each of the following independent situations? Indicate each account affected, whether the account is increased or decreased, and the amount of the increase or decrease.

For (a) and (b), indicate whether each account is increased or decreased and the amount of the increase or decrease.

a) The amount of unexpired insurance applicable to future periods is $12,000.

b) The amount of insurance expired during the year is $31,200.

Answer 1

1)	Adjustment for supplies
a)	Amount of adjustment			=	$ 3500 - $ 1100
				=	$ 2,400.00
b)	Amount of supplies purchased			=	$ 1950 + $ 650
				=	$ 2,600.00

2)	Adjustment for prepaid insurance
	Account	Increase/	Amount of
	affected	Decrease	Adjustment
a)	Prepaid Insurance	Decrease	$ 26,400.00
	Insurance Expense	Increase	$ 26,400.00
b)	Prepaid Insurance	Decrease	$ 31,200.00
	Insurance Expense	Increase	$ 31,200.00