Question

Vaughn Manufacturing purchased office supplies costing $7140 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $2550 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be:
A) debit Supplies Expense, $4590; credit Supplies, $4590.
B) debit Supplies, $2550; credit Supplies Expense, $2550.
C) debit Supplies Expense, $2550; credit Supplies, $2550.
D) debit Supplies, $4590; credit Supplies Expense, $4590.

Answer 1

Answer:

A) debit Supplies Expense, $4590; credit Supplies, $4590.

Explanation:

The movements in the supplies account over a period is as a result of purchases ( which results in an increase in the account balance) and usage of supplies( which results in a decrease).

When supplies are purchased, debit supplies account, credit cash. On use of these supplies, debit supplies expense and credit supplies.

Amount of supplies used = $7140 - $2550

=$4,590

Entries required debit Supplies Expense, $4590; credit Supplies, $4590.