Question

Boyce Company purchased office supplies costing $7,000 and debited supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1, 800 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be:__________

A) debit supplies Expense, $1, 800 credit supplies, $1, 800.
B) debit supplies Expense, $5, 200 credit supplies. $5, 200.
C) debit supplies, $5, 200; credit Supplies Expense, $5, 200.
D) debit supplies, $1, 800: credit supplies Expense, $1, 800.

Answer 1

Answer: The answer is B) debit supplies Expense, $5, 200 credit supplies. $5, 200.

Explanation: Initially when the purchase was made to the tune of $7,000, the Boyce Company would have debited supplies $7,000 and credited Cash $7,000. The supplies account that was debited reports under the current asset account in the balance and is expected to unwind to supplies expense based on usage.

Now that there was a physical count that shows $1,800 still on hand, it means $5,200 ($7,000 - $1,800) had been utilized during the period. As such, the appropriate entries to record would be Debit to Supplies expense $5,200 and Credit Supplies $5,200.