Question

The asset account, Office Supplies, had a beginning balance of $3,800. During the accounting period, office supplies were purchased, on account, for $2,500. Supplies Expense for the accounting period is $4,000. What is the ending balance of Office Supplies?

A. $2,100
B. $2,300
C. $5,300
D. $6,100
E. None of the above

Answer 1

The ending balance of Office Supplies is calculated by taking the beginning balance, adding purchases, and subtracting the supplies expense. The resulting ending balance is $2,300.

Step-by-step explanation:

To calculate the ending balance of Office Supplies, we need to consider the beginning balance, additions to the account, and the expenses during the period. The beginning balance of Office Supplies was $3,800. During the period, office supplies were purchased on account for $2,500, which increases the balance. Supplies Expense was $4,000, which will decrease the Office Supplies asset since the supplies have now been used. To calculate the ending balance, the formula is:

Ending balance = Beginning balance + Purchases - Supplies Expense

Ending balance = $3,800 + $2,500 - $4,000

Ending balance = $2,300

Therefore, the correct answer is B. $2,300.