Adjustment Entries for Service Companies: Supplies and Depreciation
📌 Adjustment entries are crucial at the end of the period for several accounts in a service company, including supplies, fixed asset depreciation, accrued expenses, and accrued revenues.
🧮 For supplies, the adjustment focuses on determining the amount used up (expense), calculated by subtracting the remaining supplies from the balance in the trial balance.
🛠️ For fixed asset depreciation, the expense is calculated based on the asset's value and the given rate (e.g., 10% per year), leading to the entry: Debit Depreciation Expense (e.g., Equipment) and Credit Accumulated Depreciation (e.g., Equipment).

Accrued Expenses and Revenues
💰 Accrued Expenses (Becomes Payable) represent obligations incurred but not yet paid (e.g., salaries, rent). The entry involves debiting the relevant Expense account (e.g., Salary Expense) and crediting a Liability account (e.g., Salaries Payable).
📥 Accrued Revenues are revenues earned but not yet received in cash. The entry records the earned revenue by debiting an Asset account (e.g., Accounts Receivable) and crediting the relevant Revenue account.

Key Points & Insights
➡️ The key concept for Supplies adjustment is accurately calculating the amount consumed/used during the period, not the remaining amount.
➡️ For Depreciation, if the percentage is given, calculate the expense based on the trial balance value of the fixed asset; if the amount is given directly, use that amount.
➡️ Accrued Expenses increase both an Expense and a Liability account, reflecting an obligation yet to be settled.
➡️ Accrued Revenues increase both a Revenue account and an Asset (Receivable) account, reflecting income earned but not yet collected.

📸 Video summarized with SummaryTube.com on Dec 16, 2025, 01:32 UTC