In its first period of operations, Lake of Fire Company purchased supplies costing $7,000 and debited Supplies for the full amount.At the end of the accounting period, a physical count of supplies revealed $1,900 still on hand.The appropriate adjusting journal entry to be made at the end of the period would be

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The company needs to adjust the Supplies account to reflect the actual balance of $1,900. Since the Supplies account was debited for the full amount of $7,000 at the time of purchase, the adjusting entry should credit the account for the amount of supplies used or consumed during the period ($7,000 - $1,900 = $5,100) and debit Supplies Expense for the same amount. Therefore, the appropriate adjusting entry is Debit Supplies Expense, $5,100; Credit Supplies, $5,100.

In Its First Period of Operations, Lake of Fire Company