The Kookie Kutter Bakery purchased $6,500 worth of baking supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the baking supplies indicated only $3,000 on hand. The adjusting entry that should be made by the company on June 30 is
A) debit Baking Supplies Expense, $3,000; credit Baking Supplies, $3,000.
B) debit Baking Supplies Expense, $3,500; credit Baking Supplies, $3,000.
C) debit Baking Supplies, $3,500; credit Baking Supplies Expense, $3,500.
D) debit Baking Supplies Expense, $3,500; credit Baking Supplies, $3,500.

Question

Quizplus · Accepted Answer

The correct adjusting entry is to debit Baking Supplies Expense for $3,500, which represents the amount of supplies used (initial $6,500 minus remaining $3,000), and credit Baking Supplies for the same amount, to reflect the decrease in inventory.

The Kookie Kutter Bakery Purchased $6,500 Worth of Baking Supplies