Asked by Azreen Azahari on May 09, 2024
Verified
Durawash Laundry purchased $8000 worth of supplies on June 2 and recorded the purchase as an asset. On June 30 an inventory of the supplies indicated only $3000 on hand. The adjusting entry that should be made by the company on June 30 is
A) Debit Supplies Expense $3000; Credit Supplies $3000.
B) Debit Supplies $3000; Credit Supplies Expense $3000.
C) Debit Supplies $5000; Credit Supplies Expense $5000.
D) Debit Supplies Expense $5000; Credit Supplies $5000.
Supplies Expense
The cost associated with the consumption of supplies used in the operation of a business.
Adjusting Entry
A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate period.
Inventory Supplies
Items or materials kept on hand by a business for the production process or for sale.
- Establish the correct adjustment entries for prepaid expenses, supplies, and accrued revenues.
- Exercise expertise in adjusting entries within particular scenarios concerning prepaid rent, supplies expense, and depreciation.
Verified Answer
GL
Gabriella LucarelliMay 12, 2024
Final Answer :
D
Explanation :
The correct adjusting entry is to debit Supplies Expense for $5000 and credit Supplies for $5000. This reflects the use of $5000 worth of supplies during the period, reducing the asset (Supplies) and recognizing the expense (Supplies Expense).
Learning Objectives
- Establish the correct adjustment entries for prepaid expenses, supplies, and accrued revenues.
- Exercise expertise in adjusting entries within particular scenarios concerning prepaid rent, supplies expense, and depreciation.