Question

The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $1,000 on hand. The adjusting entry that should be made by the company on June 30 is:A)debit Supplies Expense, $1,000; credit Supplies, $1,000.B)debit Supplies, $5,500; credit Supplies Expense, $5,500.C)debit Supplies, $1,000; credit Supplies Expense, $1,000.D)debit Supplies Expense, $5,500; credit Supplies, $5,500.

Answer 1

Answer:

D.) debit Supplies Expense. $5,500; credit Supplies, $5,500

Explanation:

First, let's talk about the amount.

On June 2 they purchased supplies worth $6,500 and recorded it as an ASSET. Debited on "Supplies" Account

Then on June 30, only $1,000 is on hand. That means that $5,500 worth of supplies must have been used (Solved as 6,500 less 1,000)

Now, the entry should reduce the "Supplies" Account since there were only $1,000 left. So it's correct to credit Supplies for $5,500 to reduce $6,500 into $1,000 worth.

The corresponding debit would consequently be "Supplies Expense" since $5,500 worth of supplies was used for the month.