In its first period of operations, Wallowa Company purchased supplies costing $6,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $1,800 still on hand. The adjusting journal entry to be made at the end of the period would be

Question

Quizplus · Accepted Answer

Since we have $1,800 supplies still on hand, the actual amount of supplies used or consumed during the period would be $6,000 - $1,800 = $4,200. Therefore, to adjust the accounts, we need to debit Supplies Expense for $4,200 (to recognize the expense for the supplies used) and credit Supplies for $4,200 (to reduce the balance to its actual amount on hand). Therefore, option C is the correct answer.

In Its First Period of Operations, Wallowa Company Purchased Supplies