Question

"Suppose Deana's had received a $1,800 shipment of supplies in September 2010. When counting the supplies on December 31, 2010, Deana's found only $800 worth of supplies on hand"

What are the accounts on the adjusting entry and how are their debits and credits affected?

Answer 1

The adjusting entry for Deana's supplies would involve debiting Supplies Expense for $1,000 and crediting Supplies for $1,000, reflecting the use of supplies between September and December.

Step-by-step explanation:

Deana needs to record the usage of supplies from the beginning balance of $1,800 to the ending balance of $800 on hand. The adjusting entry for the use of supplies would involve the Supplies Expense and Supplies accounts.

Looks like Deana used $1,000 worth of supplies from September to December ($1,800 - $800 = $1,000). The entry would be to debit Supplies Expense for $1,000, recognizing the expense, and credit Supplies for $1,000, to adjust the balance of the supplies asset down to what is actually on hand.