Question

In: Accounting

15–20... If the adjusting entry for supplies used is not recorded at the end of a...

15–20... If the adjusting entry for supplies used is not recorded at the end of a year, how will the following be affected at the end of the year? (Answer using one of the following: not affected, overstated, or understated.)

15. Assets at end of year .............................................................................................

16. Liabilities at end of year .........................................................................................

17. Stockholders’ equity at end of year .....................................................................

18. Revenues for year ..................................................................................................

19. Expenses for year ..................................................................................................

20. Net income for year ................................................................................................

Expert Solution

Answer - The adjusting entry which we pass for Supplies is

Supplies Expense A/c Dr.

To Supplies A/c

Lets see how it will affect the mentioned account heads.

1. Assets at the end of the year - Overstated - Reason - The reason is because the supplies that are used are not adjusted to account, it will show the increased balance of supplies and hence assets.

2.Liabilities at the end of the year- Not Affected - Omission of supplies adjustment entry will not affect liability side of financial statements.

3. Stockholder Equity at end of the year - Overstated - Stockholder Equity will be overstated because in the end of the year we add profit for the year to equity. Since supplies expense is not charged to profit, profit will be overstated and appear more and make the equity overstated.

4. Revenue for the Year - Not affected - The omission of supplies adjustment entry will not affect revenue.

5. Expenses for the year - Understated - Expenses will be understated becasue less expense is charged to them. Ideally charging of supplies expense will increase the amount.

6. Net Income for the year - Overstated - The amount of Net Income will be overstated as less expense has been charged to profit determination.If original supplies expense is made to charge it will reduce net income.

Kindly comment in case of any concerns/doubts. Happy to help.

Thank You, Stay Safe.

ekkarill92 answered 2 years ago

15 a) If a company fails to make an adjusting entry to record supplies expense, then...

15 a) If a company fails to make an adjusting entry to record supplies expense, then a. owner's equity will be understated. b. expense will be understated. c. assets will be understated. d. net income will be understated. b. On June 1, during its first month of operations, Brodeur Spa purchased supplies for $4,200 and debited the supplies account for that amount. At June 30, an inventory of supplies showed $1,000 of supplies on hand. What adjusting journal entry should...

Effect of Omitting Adjusting Entry The adjusting entry for accrued fees was omitted at the end...

Effect of Omitting Adjusting Entry The adjusting entry for accrued fees was omitted at the end of the current year. Indicate which items will be in error, because of the omission, on (a) the income statement for the current year and (b) the balance sheet at the end of the year. Also indicate whether the items in error will be overstated or understated. a. Income Statement Revenues Expenses Net Income b. Balance Sheet Assets Liabilities Owner’s equity

What is the adjusting journal entry for the following: Supplies at the beginning of the current...

What is the adjusting journal entry for the following: Supplies at the beginning of the current year had a balance of $300. Supplies valued at $4200 were purchased throughout the year. The current balance in the account is $200. In the Unadjusted trial balance the Supplies balance is $4500. What would the t-account adjustment look like?

Give the adjusting entries Merchandise inventory at the end of the year,P84,400 Office Supplies used amounted...

Give the adjusting entries Merchandise inventory at the end of the year,P84,400 Office Supplies used amounted to P3,450 Unused store supplies amounted to P6,000 25% of the Prepaid Rent is used as of the end of the year Half of the Prepaid Insurance has expired Office Equipment were depreciated at 10% per year Store Equipment has a useful life of 5years Accrued Expenses Utilities P4,320; Store Salaries, P3,500; Interest P16,250 Allowance of Uncollectible accounts is to be 10% of Receivables

The one adjusting entry that has not yet been recorded is income tax expense for the...

The one adjusting entry that has not yet been recorded is income tax expense for the month of September. Determine this entry and add it to the trial balance. Assume the company has an effective tax rate of 35%. Prepare each financial statement, in good form, using Excel. Good form means you should have an appropriate three-part heading, no abbreviations, and dollar signs and underscores in appropriate places. You should be proud to hand these financial statements to your banker. Use the financial statements in...

Adjusting entries: Depreciation expense must be recorded for the year. A count of the supplies inventory...

Adjusting entries: Depreciation expense must be recorded for the year. A count of the supplies inventory indicates that there are $500 in supplies remaining. An inventory count indicates that there are 16,500 units of merchandise inventory in usable condition. Prepaid rent should be adjusted to the correct balance at Dec 31. Prepaid insurance should be adjusted to the correct balance at Dec 31. Prepaid Security Services should be adjusted You receive the phone and water bills but will not pay...

The adjusting entry for accrued fees was omitted at the end of the current year.

The adjusting entry for accrued fees was omitted at the end of the current year. Indicate which items will be in error, because of the omission, on (a) the income statement for the current year and (b) the balance sheet at the end of the year. Also indicate whether the Items in error will be overstated or understated. a. Income Statement Revenues Expenses Net Income b. Balance Sheet Assets Liabilities Owner's equity

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was...

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted (i.e., the entry was not made). Which of the following statements is true? a. Net income will be understated (too low) for the current year. b. Total liabilities and total assets will be overstated (too high). c. The Balance Sheet and Income Statement will be misstated but the Statement of Retained Earnings will be correct for the current year. d. Total assets will...

when a vendor invoice is received for office supplies, the following entry is recorded: a. Debit-...

when a vendor invoice is received for office supplies, the following entry is recorded: a. Debit- accounts payable, credit- office supplies b. Debit- retained earnings, credit- office supplies c. Debit- office supplies, credit- accounts payable d. Debit- office supplies, credit accounts receivable.

(a) If the amount in Supplies Expense is the January 31 adjusting entry, and $850 of supplies was purchased in January, what was the balance in Supplies on January 1?

Debit CreditSupplies 700Prepaid Insurance 2,400Salaries and Wages Payable 800 Unearned Service Revenue 750Supplies Expense 950Insurance Expense 400Salaries and Wages Expense 1,800Service Revenue 2,000Answer the following questions , assuming the year beginning January 1 (Please prove an explanation)(a) If the amount in Supplies Expense is the January 31 adjusting entry, and $850 of supplies was purchased in January, what was the balance in Supplies on January 1?(b) If the amount in Insurance Expense is the January 31 adjusting entry, and the...