On December 31, the balance in the office supplies account is $1,385. A physical count shows $435 worth of supplies on hand. Prepare the adjusting entry for supplies. Dec. 31

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Business

Liberty Long

9 July, 02:09

On December 31, the balance in the office supplies account is $1,385. A physical count shows $435 worth of supplies on hand. Prepare the adjusting entry for supplies. Dec. 31

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Kamila Jackson · Answer 1

Debit Supplies expense account $950

Credit Office supplies account $950

Explanation:

Adjusting entries

Adjusting entries are those entries that are made for adjusting the revenue and expenses for the period in which they are incurred. It is done at the end of the accounting period after preparing the unadjusted trail balance.

First part of journal entry:

Supplies expense account:

Since supplies are consumed during the period, the expense of supplies will increase, therefore, the supplies expense account will be debited by the difference of $1,385 - office supplies account and the $435 - physical count

Supplies expense account = $1,385 - $435 = $950

Second part of journal entry:

Office supplies account

Office supplies account will be restated/adjusted to $435 by reducing the account by $950. This will be a decrease in the office supplies account (current asset). This will be represented by a "credit" to office supplies account.

The complete adjusted journal entry

Debit Supplies expense account $950

Credit Office supplies account $950