A credit
a. increases assets.
b. is on the right side.
c. decreases liabilities.
d. decreases owner's equity.
Question 2
(Treatment of inventorypurchases method)
The General Fund of the City of Mineral Wells shows 40,000 in supplies inventory on January 1, 2013 . During the year 2013, General Fund cash is used to purchase 110,000 of supplies.
On December 31, 2013, the city conducts an inventory count and finds 50,000 of supplies inventory remains. Using the purchases method of accounting for inventory, prepare the journal entries necessary to record (a) the purchase of the inventory and (b) to make the year-end adjustment to inventory.
What will be an ideal response?
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