Jenning Co.
Jenning Co.adjusts its books each month but closes its books at the end of the year.The trial balance at July 31 before adjustments is as follows:
$\begin{array}{lr}
&\text { Debit }&\text {Credit }\
\text { Cash } & \$ 12,920 \
\text { Accounts Receivable } & 9,620 \
\text { Supplies } & 1,400 \
\text { Prepaid Insurance } & 3,120 \
\text { Equipment } & 26,000\
\text { Accumulated Depreciation-Equipment } && \$ 10,400 \
\text { Unearned Service Revenue } && 6,500 \
\text { Capital Stock } && 7,190 \
\text { Retained Earnings } && 23,500\
\text { Dividends } & 1,560 \
\text { Service Revenue } &&16,510 \
\text { Wages and Salaries Expense } & 7,800 \
\text { Utilities Expense } & 380 \
\text { Rent Expense } & \underline{1,300} \
& \underline{\$ 64,100}& \underline{\$64,000} \
\end{array}$
-Refer to the trial balance for Jenning Co. On July 31,the amount of supplies on hand is $520.What amount is reported in the July income statement for supplies expense?

Question

Jenning Co.
Jenning Co.adjusts its books each month but closes its books at the end of the year.The trial balance at July 31 before adjustments is as follows:
 $\begin{array}{lr}
&\text { Debit }&\text {Credit }\
\text { Cash } & \$ 12,920 \
\text { Accounts Receivable } & 9,620 \
\text { Supplies } & 1,400 \
\text { Prepaid Insurance } & 3,120 \
\text { Equipment } & 26,000\
\text { Accumulated Depreciation-Equipment } && \$ 10,400 \
\text { Unearned Service Revenue } && 6,500 \
\text { Capital Stock } && 7,190 \
\text { Retained Earnings } && 23,500\
\text { Dividends } & 1,560 \
\text { Service Revenue } &&16,510 \
\text { Wages and Salaries Expense } & 7,800 \
\text { Utilities Expense } & 380 \
\text { Rent Expense } & \underline{1,300} \
&  \underline{\$ 64,100}& \underline{\$64,000} \
\end{array}$
-Refer to the trial balance for Jenning Co. On July 31,the amount of supplies on hand is $520.What amount is reported in the July income statement for supplies expense?

Quizplus · Accepted Answer

The amount of supplies on hand is not the same as supplies expense. Rather, supplies expense is the amount of supplies that have been used up or consumed during the period. To calculate this, we need to find the difference between the amount of supplies at the beginning of the period (as shown in the trial balance) and the amount of supplies on hand at the end of the period (given as $520).

Beginning supplies = $1,880
Ending supplies = $520
Supplies used = Beginning supplies - Ending supplies = $1,880 - $520 = $1,360

Therefore, the amount reported in the July income statement for supplies expense is $1,360, which corresponds to option D.

Jenning Co -Refer to the Trial Balance for Jenning Co