Model Company Keeps a Small Inventory of Supplies Used for Cleaning

question 146

Essay

Model Company keeps a small inventory of supplies used for cleaning and maintenance purposes. On January 1, 20X1, the inventory of supplies on hand was $400. During the year, supplies purchased were debited to the supplies inventory account in the amount of $800. On December 31, 20X1, the inventory count of supplies in the storeroom was $100. Give the adjusting entry required at December 31, 20X1.

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Definitions:

Unmodified Opinion

An auditor's report that concludes the financial statements of an entity are fairly and appropriately presented, without any identified exceptions.

Unusual Items

Refers to uncommon or rare transactions that are not expected to occur frequently within the normal course of business.

Accounting Principles

Fundamental guidelines or rules that form the basis for accounting practices, such as relevance, reliability, comparability, and consistency.

Quick Ratio

A liquidity measure that indicates a company's ability to cover its short-term liabilities with its most liquid assets.