Question

At year end, a physical count of office supplies reveals that $7,000 of supplies were used up but no adjusting entry was made to account for this. If this omission is found before the books are closed, the adjusting entry to correct the error will include.....

Answer 1

The adjusting entry to account for the $7,000 of used office supplies would involve debiting Office Supplies Expense and crediting Office Supplies Inventory by the same amount.

Step-by-step explanation:

The student's question pertains to an unrecorded expense of office supplies at year end. The question is asking for the proper adjusting entry that needs to be made if $7,000 worth of office supplies were used up but no entry was recorded. To correct this, the adjusting entry would debit Office Supplies Expense for $7,000 and credit Office Supplies Inventory for $7,000.

This would have the effect of increasing expenses and decreasing assets on the balance sheet, accurately reflecting the use of supplies during the period.