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22 March, 13:34

Muldoon Advertising has an opening balance in its supplies account of $2,400 and purchases $3,000 of supplies during the year. A year-end physical count shows $2800 in supplies inventory. Which is the appropriate journal entry at year end?

A) Dr Supplies Expense $2,600

Cr Supplies $ 2,600

B) Dr Supplies Expense $2,800

Cr Supplies $ 2,800

C) Dr Supplies $2,600

Cr Supplies Expense $ 2,600

D) Dr Supplies $3,000

Cr Cash $3,000

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Answers (1)
  1. 22 March, 17:23
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    A) Dr Supplies Expense $2,600

    Cr Supplies $ 2,600

    Explanation:

    The supplies account had an opening balance of $ 2400. Purchases were made of $ 3000 so the total debit balance was $ 5400. The year end showed a debit balance of $ 2800.

    So $ 5400 - $ 2800 = $ 2600 Supplies were used and credited.

    An expense account would be used to show this so

    Supplies Expense is debited with $ 2600 and

    Supplies Account is credited with $ 2600 showing a net debit balance of $ 2800 at the end of the year.
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