Question

the company has a supplies account balance of $200 on january 1. during the year, the company purchased $1,500 of supplies. as of december 31, a count revealed that there were $500 of supplies on hand. complete the necessary journal entry.

Answer 1

The journal entry to adjust for the supplies used by the company is to debit Supplies Expense for $1,200 and credit Supplies for $1,200, reflecting the use of $1,200 worth of supplies over the year.

Step-by-step explanation:

The question is about making the necessary journal entry to account for the supplies used by the company throughout the year.

The company started with a supplies account balance of $200 on January 1 and purchased additional supplies worth $1,500 during the year. By the end of the year, $500 worth of supplies were still on hand. To record the use of supplies during the year, we need to adjust the supplies account to match the ending inventory.

The necessary journal entry would decrease (credit) the Supplies account and increase (debit) the Supplies Expense account to reflect the used supplies. The Supplies account should be credited with the cost of supplies used ($1,200), calculated as the sum of supplies at the beginning of the year and purchases during the year, minus the ending inventory ($200 + $1,500 - $500).