Question

A total of $3,700 in supplies was purchased during the year. By the end of the year, the company had used $2,200 of the supplies. The adjusting entry needed at the end of the year is: Multiple Choice debit Supplies $2,200; credit Supplies Expense $2,200 debit Supplies Expense $1,500; credit Supplies $1,500 debit Supplies Expense $2,200; credit Supplies $2,200 debit Supplies Expense $3,700; credit Supplies $3,700

Answer 1

Answer:

Supplies expense                 $2200 Dr

       Supplies                                $2200 Cr

Explanation:

The adjusting entries are made at the end of the accounting period under the accrual basis of accounting. The accrual principle states that the revenue and expenses for a period should be matched and recorded in that particular period.

Supplies expense is calculated by determining the amount of supplies at start of the year and adding the purchases of supplies. At the end of the year, the closing inventory of supplies is determined and the difference between supplies available and the closing inventory is charged as supplies expense.

Supplies expense = Opening Inventory + Purchases - Closing inventory

Supplies expense = 3700 - 1500   =  $2200