1 On March 1 supplies were purchased for 1000 Half the suppl

1. On March 1, supplies were purchased for $1,000. Half the supplies were left at year end. For the adjusting journal entry (if there is one) the effect on each of the following of not recording the adj entry is: [Write O (Overstates), U (Understates), or NE (No Effect) next to each account type.] Asset: Liability: Revenue: Expense: Net Income:

Solution

Adjusting Journal Entry to be passed: Particulars Dr. Amt. Cr. Amt. Supplies Expense      500.00    Supplies      500.00 So, Assets - Supplies Overstated Liabilities No Effect Revenue No Effect Expenses Understated Net Income Overstated