Cara, Inc. purchased supplies costing ₤3,500 on January 1, 2014 and recorded the transaction by increasing assets. At the end of the year ₤1,300 of the supplies are still on hand. How will the adjusting entry impact Cara, Inc.'s statement of financial position at December 31, 2014?

Question

Quizplus · Accepted Answer

The adjusting entry will decrease the balance of the supplies asset account by ₤1,300 to reflect the amount still on hand at the end of the year. This will result in a decreased total assets amount on the statement of financial position. Therefore, the correct answer is D as it shows a decreased asset amount.

Cara, Inc Purchased Supplies Costing ₤3,500 on January 1, 2014 and and Recorded