A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,250 of supplies on hand. The general ledger balance before any adjustment is $2,100. What is the adjusting entry for office supplies that should be recorded on May 31?
A) Debit Supplies Expense $1,250 and credit Supplies $2,100.
B) Debit Prepaid Supplies $850 and credit Supplies Expense $850.
C) Debit Supplies $1,250 and credit Cash $1,250.
D) Debit Supplies Expense $1,250 and credit Supplies $1,250.
E) Debit Supplies Expense $850 and credit Supplies $850.

Question

Quizplus · Accepted Answer

The adjusting entry should reflect the amount of supplies used. The difference between the ledger balance ($2,100) and the physical count ($1,250) is $850, which represents the supplies used. Therefore, debit Supplies Expense $850 and credit Supplies $850.

A Physical Count of Supplies on Hand at the End