Answer:
a. Case A-the $1,125 was debited to Supplies Expense. What is the balance of Supplies at year-end?
The previous balance was Supplies $225
If the following was made:
Dr Supplies expense 1,125
Cr Supplies 1,125
Then the ending balance of Supplies would be = -$900
b. Case B the $1,125 was debited to supplies. What is the balance of Supplies at year-end?
The previous balance was Supplies $225
If the following was made:
Dr Supplies 1,125
Cr Supplies expense 1,125
Then the ending balance of Supplies would be = $1,350
Explanation:
During the current year, supplies were purchased for $1,125 cash. The inventory of supplies at the prior year-end was $225.
Adjusting entry to record supplies expense = $1,125 + $225 - $360
Dr Supplies expense 990
Cr Supplies 990
Ending balance of supplies inventory = $360
