Speedy Clean Laundry purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is

Question

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The adjusting entry that should be made on June 30 is to record the expense for the amount of laundry supplies that were used during the month. The difference between the amount of supplies purchased and the amount remaining is $4,500 ($6,500 - $2,000 = $4,500). Therefore, the correct adjusting entry is to debit the Laundry Supplies Expense account for $4,500 and credit the Laundry Supplies account for $4,500. This will reflect the usage of the supplies and reduce the asset account to the correct amount on hand. Choice D is the correct answer.

Speedy Clean Laundry Purchased $6,500 Worth of Laundry Supplies on June