Question

Alice Corporation had $2,400 in supplies on hand at the beginning of December. During the month, supplies

purchased amounted to $4,400, but by the end of the month the supplies on hand were only $3,200. What is
the appropriate month-end adjusting entry?
a. Debit Supplies Expense $3,200, credit Supplies $3,200.
b. Debit Supplies $3,600, credit Supplies Expense $3,600
c. Debit Cash $3,200, credit Supplies $3,200
d. Debit Cash $3,600, credit Supplies $3,600
e. Debit Supplies Expense $3,600, credit Supplies $3,600

Answer 1

The correct month-end adjusting entry for Alice Corporation is to debit Supplies Expense and credit Supplies by $3,600, reflecting the use of supplies during the month.

Step-by-step explanation:

The student is asking about the appropriate month-end adjusting entry for Alice Corporation's supplies account. At the start of December, the corporation had $2,400 in supplies on hand. Over the course of the month, they purchased an additional $4,400 worth of supplies. By the end of December, they only had $3,200 in supplies on hand. The correct month-end adjustment would be to record the supplies used.

To calculate the cost of supplies used, we subtract the total supplies on hand at the end of the month from the total available supplies (beginning balance plus purchases). This results in $2,400 + $4,400 - $3,200 = $3,600 worth of supplies used during the month. The appropriate journal entry would thus be to debit Supplies Expense for $3,600 and credit Supplies for $3,600, reflecting the cost of supplies that have been consumed. Therefore, the correct answer is e. Debit Supplies Expenses $3,600, credit Supplies $3,600