This document provides guidance on adjusting entries for prepaid expenses using two methods: the asset method and expense method. It includes an example transaction where a company purchased $100,000 of office supplies on August 1, paying in cash, with $40,000 of supplies remaining on December 31. Under the asset method, the original debit is to an office supplies asset, with an adjusting debit to office supplies expense on December 31. Under the expense method, the original debit is made directly to office supplies expense.
This document provides guidance on adjusting entries for prepaid expenses using two methods: the asset method and expense method. It includes an example transaction where a company purchased $100,000 of office supplies on August 1, paying in cash, with $40,000 of supplies remaining on December 31. Under the asset method, the original debit is to an office supplies asset, with an adjusting debit to office supplies expense on December 31. Under the expense method, the original debit is made directly to office supplies expense.
This document provides guidance on adjusting entries for prepaid expenses using two methods: the asset method and expense method. It includes an example transaction where a company purchased $100,000 of office supplies on August 1, paying in cash, with $40,000 of supplies remaining on December 31. Under the asset method, the original debit is to an office supplies asset, with an adjusting debit to office supplies expense on December 31. Under the expense method, the original debit is made directly to office supplies expense.
This document provides guidance on adjusting entries for prepaid expenses using two methods: the asset method and expense method. It includes an example transaction where a company purchased $100,000 of office supplies on August 1, paying in cash, with $40,000 of supplies remaining on December 31. Under the asset method, the original debit is to an office supplies asset, with an adjusting debit to office supplies expense on December 31. Under the expense method, the original debit is made directly to office supplies expense.
Prepaid Expenses Jimin Company purchased office supplies on August 1, 2020 amounting to P100,000 in which the company immediately paid in cash. At December 31, 2020 which coincides to be the end of the accounting period, inventory records show that the amount of remaining office supplies amount to P40,000.
Prepare the initial and adjusting entries for this transaction using the two methods namely, asset method and expense method.
1. How much should be presented as office supplies in the December 31, 2020 Statement of Financial Position? ___________________ 2. How much should be presented as office supplies expense in the income statement for the year ended December 31, 2020? ________________________
