Question

The following events pertain to Jasper Corporation: May 1 Jasper purchased office supplies of $3,000 on account. May 5 The office supplies were shipped to Jasper. May 8 Jasper used these office supplies for a one-time event. May 9 Jasper paid $3,000 cash for the office supplies purchased on May 1. Using cash-basis accounting, on which date should Jasper record supplies expense?

Answer 1

Answer:

May 9th

Explanation:

When a company uses a cash basis accounting, it records its revenues and expenses on the day that the money is received or paid respectively. In this case, the supplies were purchased on May 1st, delivered on May 5th, used on May 8th, but paid on May 9th. And the date of the payment is what matters here.

The journal entry should be as following:

May 9, office supplies.

Dr Supplies expense 3,000

    Cr Cash 3,000