A company began operations and purchased $5,000 of supplies. By year end, $2,700 was still on hand. The adjusting entry at year end would include a:

Question

Quizplus · Accepted Answer

DThe correct adjusting entry at year end would include a credit to supplies for $2,300, which represents the amount of supplies used ($5,000 initial purchase - $2,700 still on hand). Additionally, there should be a debit to supplies expense for $2,300 (not $2,700 as stated in the options), reflecting the expense of the supplies used during the period. However, given the options provided, D is chosen over the exact amount because it aligns with the need to recognize the expense, despite the numerical discrepancy.

A Company Began Operations and Purchased $5,000 of Supplies