The policy at Adler Corporation is to expense all office supplies at the time of purchase.On the last day of the accounting period, there are $1,100 of unused office supplies on hand and the balance of supplies expense is $3,500.What should the accountant do?
A)Debit Supplies and credit Supplies Expense for $1,100.
B)Nothing, company policy says to expense supplies when purchased.
C)Convince management to change its policy to avoid problems in the future.
D)Debit Supplies Expense for $2,400 and credit Supplies for $2,400.

Question

Quizplus · Accepted Answer

The accountant should adjust the accounts to reflect the actual usage of supplies. By debiting Supplies and crediting Supplies Expense for $1,100, the accountant corrects the overstatement of expenses and recognizes the asset on hand.

The Policy at Adler Corporation Is to Expense All Office