Question

Dreamtime Laundry purchased $7,000 worth of supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is
a. Debit Supplies Expense, $2,000; Credit Supplies, $2,000.

b. Debit Supplies, $2,000; Credit Supplies Expense, $2,000.

c. Debit Supplies, $5,000; Credit Supplies Expense, $5,000.

d. Debit Supplies Expense, $5,000; Credit Supplies, $5,000

Answer 1

Answer:

The correct option is D.

Step-by-step explanation:

Given information:

On June 2 : Dreamtime Laundry purchased $7,000 worth of supplies.

On June 30 : An inventory of the supplies indicated only $2,000 on hand.

The adjusted amount is

$\ 7,000-\ 2,000=\ 5,000$

To adjust the amount we need to debit Supplies Expense by $5000 and credit Supplies by $5,000.

So, the required adjusting entry that should be made by the company on June 30 is

Supplies Expense        $5,000

             Credit Supplies           $5,000

Therefore, the correct option is D.