Adjustment for Supplies}

The downtown location of Montreal Clothiers purchases large quantities of supplies, including plastic garment bags, paper bags, and boxes. At December 31, 2018, the following information is available concerning these supplies:

All purchases of supplies during the year are debited to the supplies account.
\section*{Required:}
1. What is the expense reported on the statement of earnings associated with the use of supplies during 2018 ?
2. What is the proper adjusting entry at December 31,2018 ?
3. By how much would assets and income be overstated or understated if the adjusting entry were not recorded?
\section*{Exercise

Transcribed Image Text:

Supplies, 1/1/2018 Supplies, 12/31/2018 Supplies purchased for cash during 2018 $ 4,150 5,220 12,690