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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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Capricious23

Answer:

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

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