Question

The supplies account had a beginning balance of $1,506. Supplies purchased during the period totaled $4,478. At the end of the period before adjustment, $434 of supplies were on hand. Prepare the adjusting entry for supplies. If an amount box does not require an entry, leave it blank.

Answer 1

Answer:

Debit  Supplies expense $5,550

Credit Supplies account $5,550

Explanation:

The movement in the balance of supplies at the start and end of a period is as a result of usage and purchases. While usage reduces the balance in supplies, purchases increases the balance. This may be expressed mathematically as

Opening balance + purchases - units used = closing balance

The adjustment required is for the recognition of supplies used. When supplies are purchased, Debit Supplies account, credit cash or accounts payable. On use of supplies, Debit  Supplies expense, credit Supplies account

$1506 + $4,478 - units used = $434

Units used = $1506 + $4,478 - $434

= $5,550