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Chapter 3: Q. 3-7TI (page 149)

Iron Horse Printing Services purchased \(1,000 of printing supplies for cash, recording the transaction using the alternative treatment for deferred expenses. At the end of the year, Iron Horse had \)300 of printing supplies remaining. Record the journal entry for the purchase of printing supplies and the adjusting entry for printing supplies not used.

Short Answer

Expert verified

Journal entries are as follows:

Date

Accounts and Explanation

Debit

Credit

Supplies Expense

$1,000

Cash

$1,000

To record the purchase of supplies

Printing Supplies

$300

Supplies Expense

$300

To record ending supplies

Step by step solution

01

Explanation on Adjusting Entries

Adjusting entries are recorded at the end of the accounting period, to record the earned revenues and incurred expenses.

02

Explanation on entries

To record deferred expense, purchase of office supplies will be recorded by debiting supplies expense and crediting cash by $1,000. At the end of the period, ending balance of office supplies will be recorded by debiting printing supplies and crediting supplies expense by $300.

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