On May 31, 2018, the physical count of supplies was $2,400. During June, supplies were acquired at a cost of $1,600 and the company debited Supplies Expense. At June 30, actual supplies on hand totaled $500. The credit part of the adjusting entry required at the end of June is

Question

Quizplus · Accepted Answer

The adjusting entry is needed to update the Supplies account balance to match the actual supplies on hand. The Supplies account should show the beginning balance plus any supplies acquired during the period minus the actual supplies on hand at the end of the period. Therefore, the credit part of the adjusting entry should be for the difference between the beginning balance plus supplies acquired (2400 + 1600 = 4000) and the actual supplies on hand at the end of the period (500), or $1,900. Since Supplies was debited for the cost of supplies acquired, the credit part of the adjusting entry should be for the same amount, and the Supplies account will be updated by the adjusting entry to show a balance of $1,900.

On May 31, 2018, the Physical Count of Supplies Was