Question

A company purchased office supplies costing $3,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $900 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be: a. debit Supplies Expense, $3,900; credit Supplies, $3,900. b. debit Supplies, $900; credit Supplies Expense, $900. c. debit Supplies Expense, $2,100; credit Supplies, $2,100. d. debit Supplies, $2,100; credit Supplies Expense, $2,100.

Answer 1

Answer:

c. debit Supplies Expense, $2,100; credit Supplies, $2,100.

Explanation:

for the difference between book value and physical count of supplies we must assume it was consumed and therefore it represent incurred cost.

Wer must decrease supplies for the amount used and declare the expense

beginning supplies    3,000

ending supplies          (900)  

supplies expense       2,100