Question

The Office Supplies account had a balance at the beginning of year 3 of $4,000 (before the reversing entry). Payments for purchases of office supplies during year 3 amounted to $25,000 and were recorded as expense. A physical count at the end of year 3 revealed supplies costing $4,750 were on hand. Reversing entries are used by this company. The required adjusting entry at the end of year 3 will include a debit to:

a. Office Supplies Expense for $750.
b. Office Supplies for $750.
c. Office Supplies Expense for $24,250.
d. Office Supplies for $4,750.

Answer 1

a. Office Supplies Expense a/c Dr. $750

Step-by-step explanation:

We are provided that office supplies are recorded as an expense, in that case entry will be:

Office Supplies Expense A/c Dr.

To Cash A/c

After this, there is a valuation of closing balance of supplies in hand.

As per books = $4,000

As per inventory of supplies in hand = $4,750

The difference = $4,750 - $4,000 = $750

This will be recorded in Office supplies expense as in this account only the supplies are recorded.

Therefore correct option is

a. Office Supplies Expense a/c Dr. $750