The entry required to account for the change in office supplies would depend on the accounting method used. Assuming the company follows the periodic inventory system, where office supplies are expensed as they are used, the entry would be as follows:
At the beginning of the period:
Debit: Office Supplies Expense - $4,000
Credit: Office Supplies - $4,000
At the end of the period:
Debit: Office Supplies - $3,900
Credit: Office Supplies Expense - $3,900
Step-by-step explanation:
1. At the beginning of the period, the company records the office supplies as an asset (Office Supplies) and recognizes an expense (Office Supplies Expense) for the same amount. This reduces the value of the asset and reflects the cost of supplies used during the period.
2. At the end of the period, when it is determined that $3,900 worth of supplies remains, the company adjusts the office supplies account by reducing it by the remaining amount. This adjustment is necessary to reflect the correct value of supplies on hand at the end of the period.
The entry ensures that the net effect of the transactions is an expense of $100 ($4,000 - $3,900), which represents the cost of supplies consumed during the period.