Question

Boyce Company purchased office supplies costing $7000 and increased supplies for the full amount. At the end of the accounting period, A physical count of the office supplies Revealed $1800 on hand. The appropriate adjustments to be made at the end of the period would be:

Answer 1

Boyce Company will adjust their office supplies by debiting Supplies Expense for $5200 and crediting Supplies for $5200, reflecting the use of $5200 in supplies during the accounting period and leaving $1800 on hand.

Step-by-step explanation:

When Boyce Company purchased office supplies costing $7000 and increased supplies for the full amount, they recorded this amount as an asset. By the end of the accounting period, a physical count of the office supplies revealed that there were $1800 worth of supplies on hand. To properly reflect the consumption of supplies during the period, an adjustment must be made.

The adjustment will involve debiting (increasing) Supplies Expense and crediting (decreasing) Supplies for the amount of supplies used. The calculation is as follows:

• Initial supplies recorded (asset): $7000
• Physical count of supplies on hand: $1800
• Supplies used during the period (expense): $7000 - $1800 = $5200

Thus, the journals entries would be:

1. Debit Supplies Expense for $5200.
2. Credit Supplies for $5200.

This adjusts the supplies account to the actual value on hand and properly matches expenses with the period in which they were incurred, following the principle of expense recognition.