Use this information to answer the following question. The trial balance for Nowwick Company appears as follows:

-If on December 31,2014,supplies on hand were $120,the adjusting entry would contain a
A)credit to Supplies for $120.
B)credit to Supplies Expense for $180.
C)debit to Supplies Expense for $180.
D)debit to Supplies for $120.

Question

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows:

-If on December 31,2014,supplies on hand were $120,the adjusting entry would contain a
A)credit to Supplies for $120. 
B)credit to Supplies Expense for $180. 
C)debit to Supplies Expense for $180. 
D)debit to Supplies for $120.

Quizplus · Accepted Answer

The supplies account has a balance of $300 ($420 debit - $120 credit) which represents the cost of supplies purchased during the year. The supplies on hand as of December 31, 2014, is only $120. Therefore, the supplies expense must be adjusted by $180 ($300 - $120) to reflect the supplies used during the year. This requires a debit to Supplies Expense for $180 in the adjusting entry.

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