A physical count of supplies on hand at the end of May for Masters,Inc.indicated $1,250 of supplies on hand.The general ledger balance before any adjustment is $2,100.What is the adjusting entry for office supplies that should be recorded on May 31?
A)Debit Supplies Expense $1,250 and credit Supplies $1,250.
B)Debit Prepaid Supplies $850 and credit Supplies Expense $850.
C)Debit Supplies Expense $1,250 and credit Supplies $2,100.
D)Debit Supplies $1,250 and credit Cash $1,250.
E)Debit Supplies Expense $850 and credit Supplies $850.

Question

Quizplus · Accepted Answer

The correct adjusting entry is to debit Supplies Expense for $850 and credit Supplies for $850. This adjusts the supplies account to reflect the $1,250 of supplies actually on hand, recognizing the $850 ($2,100 - $1,250) of supplies used during the period as an expense.

A Physical Count of Supplies on Hand at the End