Multiple Choice
The main purpose of adjusting entries for supplies at the end of an accounting period is to:
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3. Accrual Accounting Concepts
Adjusting Entries: Supplies
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A company has $350 in its supplies account at the beginning of the year. Throughout the year, the company purchased an additional $500 worth of supplies, which it recorded to the supplies account. The year-end count of office supplies revealed a remaining balance of $400. The entry to adjust the balance of the supplies account would include:
A
Debit Supplies $450; Credit Supplies Expense $450
B
Debit Supplies Expense $450; Credit Supplies $450
C
Debit Supplies $50; Credit Supplies Expense $50
D
Debit Supplies Expense $50; Credit Supplies $50
Verified step by step guidance1
Identify the initial balance in the supplies account, which is $350.
Add the additional supplies purchased during the year, which is $500, to the initial balance. This gives the total supplies available for the year.
Determine the ending balance of supplies by conducting a physical count, which reveals $400 worth of supplies remaining.
Calculate the amount of supplies used during the year by subtracting the ending balance from the total supplies available. This represents the supplies expense.
Record the adjusting journal entry by debiting Supplies Expense for the amount of supplies used and crediting Supplies for the same amount to reflect the decrease in supplies.
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