Question

Sierra Corporation purchased supplies costing $2,500 on October 5. An inventory count at the close of business on October 31 reveals that $1,000 of supplies are still on hand. What is the adjusting entry?

a. Debit Supplies Expense $1,500; Credit Supplies $1,500

b. Debit Supplies $1,500; Credit Supplies Expense $1,500

c. Debit Supplies Expense $2,500; Credit Supplies $2,500

d. Debit Supplies $2,500; Credit Supplies Expense $2,500

Answer 1

The adjusting entry for the situation described is Debit Supplies Expense $2,500; Credit Supplies $2,500.

Step-by-step explanation:

The adjusting entry for the situation described is option c. Debit Supplies Expense $2,500; Credit Supplies $2,500. This entry is necessary because the supplies purchased on October 5 have not all been used or consumed by the end of the month. The Supplies Expense account is debited to recognize the cost of the supplies used during the period, and the Supplies account is credited to reduce its balance and reflect the supplies still on hand.