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Jammo

Accounting Adjusting Entries

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Anyone familiar with accounting? Working on a project and I have to prepare an adjusting entry for the following transaction:

 

$17,500 of store supplies were purchased during the year and were immediately expensed. A count of the store supplies on hand December 31, 2012 indicates a balance of $1,100.

 

The specific part that confuses me is how it says that the supplies were immediately expensed, idk exactly how that changes the journal entry. The unadjusted balances for Supplies Expense are $17,500 and for Store Supplies $0.

 

Edit: Also I am preparing the adjusting entries for Dec 31, 2012, end of the accounting period

Edited by Jammo

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I don't believe it changes the entry what soever. From my own knowledge what happens as an accountant you would have a budget for a year ( so example FY 2014) you may have let's say for this example $17,500 put aside for store supplies. When it says and were immediately expensed. It means that items were bought immediately/or that those planned expenses for that year were immediately put a side.

 

By the end of the date set forth in your example there was $1,100 left. This means that (I assume that they are going July-June not January-December) by the end of December(halfway through the year) only $1,100 was left meaning they have spent more than was planned for.

 

Don't forget also that there are two types of expenses accrued and also prepaid expenses.While something such as supplies can be somewhat accurate they are estimates cause you never know when maintenance etc may be needed or when in certain companies when more supplies of a certain kind might be used one year but not a next year.

 

An adjusting entry(I'm no accountant mind you) would be a journal entry to show how much percent of that expense category was used in that pay period or whatever.

 

Or at least that's the way I am taking this.

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from what i can find Kaysie seem to be pretty much on target.

 

Another (similar if not exact) example would be like a store or sporting club with bonuses that can be spent on certain prizes/items available based on activity points. At any point of the year the association is holding $X of debt in uncollected but still accrued on the books "points" - so even though there may be $1100 available on the balance check/count day, it is still recorded as expediture/debt on the books as its not really available for other commitments.

 

edit: rushing, couldnt spell :)

Edited by Bwauder

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