Karcan, Inc. purchased supplies costing ₤2,500 on January 1, 2014 and recorded the transaction by increasing assets. At the end of the year ₤1,100 of the supplies are still on hand. How will the adjusting entry impact Karcan, Inc.'s statement of financial position at December 31, 2014?

Question

Quizplus · Accepted Answer

The adjusting entry will decrease assets by ₤1,400 because ₤2,500 of supplies were initially recorded as assets, and ₤1,100 remain, meaning ₤1,400 were used up and should be expensed, reducing the asset balance.