Question

During the first year of Wilkinson Co.'s operations, all purchases were recorded as assets. Supplies in the amount of $28,800 were purchased. Actual year-end supplies amounted to $6,600. The adjusting entry for store supplies will

a. increase net income by $22,200.
b. increase expenses by $22,200.
c. decrease supplies by $6,600.
d. debit Accounts Payable for $6,600.

Answer 1

The adjusting entry for supplies on Wilkinson Co.'s ledger will increase expenses by $22,200, reflecting the used supplies cost during the year and aligning the expense with the correct accounting period.

Step-by-step explanation:

The subject question pertains to an adjustment for supplies expense at year end in accounting. Initially, all purchases, including supplies, were recorded as assets on Wilkinson Co.'s ledger. By the end of the year, actual supplies on hand amounted to $6,600. The adjusting entry to account for the use of supplies over the year would involve debiting the supplies expense and crediting the supplies account. In this case, the correct entry would be to increase expenses by $22,200, which is the difference between the supplies originally purchased ($28,800) and the actual year-end supplies amount ($6,600). This entry would reflect the consumption of supplies during the year and match the expense to the period in which the supplies were used.