Greese Company purchased office supplies costing $4,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,500 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be:

Question

Quizplus · Accepted Answer

The company initially recorded the entire $4,000 as Supplies. At the end of the period, $1,500 remains, meaning $2,500 was used. The adjusting entry should recognize this usage as an expense: debit Supplies Expense $2,500 and credit Supplies $2,500.

Greese Company Purchased Office Supplies Costing $4,000 and Debited Supplies