Supplies.

Yazici Advertising purchased advertising supplies costing ₺25,000 on account on

October 5. Prepare the journal entry to record the purchase of the supplies.

Dr Supplies 25,000
Cr Account payable 25,000

Post to ledger
Supplies Account payable
OB Oct 1: 0 OB Oct 1: 0
25,000 25,000
CB Oct 31: CB Oct 31:
25,000 25,000

Trial balance
Trial balance OCT 31
Accounts Debit Credit
Supplies 25,000
Account payable 25,000
Total 25,000 25,000

An inventory count at the close of business on October 31 reveals that ₺10,000 of supplies are
still on hand

Adjusting entry:
Dr Supplies expense 15,000
Cr Supplies 15,000

Post to ledger
Supplies Supplies expense
TB Oct 31:
25,000
15,000 15,000
CB Oct 31: Total: 15,000
10,000

Adjusted Trial balance OCT 31

Accounts Debit Credit
Supplies 10,000
Supplies expense 15,000
Account payable 25,000
Total 25,000 25,000
What if in Nov 1, purchase supplies $30,000 on account and Nov 30 the count of ending
inventory shows that $20,000 of supplies remain unused.

Nov 1
Dr Supplies 30,000
Cr Account payable 30,000

Nov 30
Dr Supplies expense 20,000
Cr Supplies 20,000

Supplies Supplies expense

OB Nov 1:
10,000
30,000 20,000 20,000
CB Nov 30: Total: 20,000
20,000

Prepaid Insurance. On Oct. 4th, Yazici Advertising paid ₺6,000 for a one-year fire insurance
policy, beginning October 1. Show the entry to record the purchase of the insurance.

Dr Prepaid insurance 6,000

Cr Cash 6,000

Oct 31 adjusting entry

Dr Insurance expense 500

Cr Prepaid Insurance 500

Nov 30 adjusting entry

Dr Insurance expense 500

Cr Prepaid Insurance 500

Depreciation applied PPE. Yazici Advertising estimates depreciation on its office equipment to
be ₺400 per month. Yazici recognizes depreciation for October by the following adjusting entry.

Dr Depreciation expense 400

CR Accumulated depreciation 400

Accumulated depreciation is contra asset account.

Accumulated depreciation increase = PPE decrease
Dr/CR rule for Accumulated depreciation is similar to liability account
Unearned Revenue. Yazici Advertising received ₺12,000 on October 2 from KC for advertising
services expected to be completed by December 31.

Oct 2
Dr Cash 12,000
Cr Unearned revenue 12,000

Oct 31 adjusting entry

DR Unearned revenue 4,000
Cr Service revenue 4,000

Accrued Revenues. In October Yazici Advertising performed services worth ₺2,000 that were
not billed to clients on or before October 31. Yazici makes the following adjusting entry

Dr Account receivable 2,000

Cr Service revenue 2,000

Accrued Interest expense. Yazici Advertising signed a three-month note payable in the amount
of ₺50,000 on October 1. The note requires interest at an annual rate of 12 percent.

Oct 1

Dr Cash 50,000
Cr Note payable 50,000

Interest expense annual = Face value 50,000 x annual interest rate 12% = 6,000
Interest expense monthly = Interest expense annual / 12 = 500

What if accounting period is a month?

Oct 31 adjusting entry

Dr Interest expense 500

Cr Interest payable 500

What if accounting period is a quarter?

Dec 31 adjusting entry

Dr Interest expense 1,500
Cr Interest payable 1,500
Accrued Salaries expense: At October 31, the salaries and wages for these days represent an
accrued expense and a related liability to Yazici. The employees receive total salaries of ₺10,000
for a five-day work week, or ₺2,000 per day.

Oct 31
Dr Salaries expense 3x2,000 = 6,000
Cr Salaries payable 6,000

Nov 23 payday
Dr Salaries payable 6,000
Cr Cash 6,000
Dr Salaries expense (Nov) 2,000 x 17 = 34,000
Cr Cash 34,000