At 1 January, Smith has $1 200 of supplies on hand. During January, Smith purchases $3 000 worth of new supplies. At the end of the month, a count reveals $500 worth of supplies remaining on the shelves. The adjustment entry needed will include a debit to Supply expense of $3 700.

Question

Quizplus · Accepted Answer

The adjustment entry for supplies expense is calculated by adding the beginning inventory ($1,200) and purchases ($3,000), then subtracting the ending inventory ($500), resulting in a supplies expense of $3,700.

At 1 January, Smith Has $1 200 of Supplies on Hand