Question

A company started the year with $1,500 of supplies on hand. During the year the company purchased additional supplies of $800 and recorded them as increase to the supplies asset. At the end of the year the company determined that only $300 of supplies are still on hand. What is the adjusting journal entry to be made at the end of the period

Answer 1

Answer:

Debit : Supplies Expense $2,000

Credit : Supplies  $2,000

Explanation:

The adjusting journal entry to be made at the end of the period should reflect the usage of supplies.

Supplies used = Opening Balance + Purchases - Inventory Balance

therefore,

Supplies used = $1,500 + $800 - $300

                        = $2,000

A Debit to Expense Account - Supplies Expense and A  Credit to Asset Account - Supplies must be made to depict the usage of supplies.