At the beginning of the year, a business had office supplies on hand in the amount of $35,000. During the year, the business acquired additional supplies in the amount of $27,000. At year-end, in anticipation of preparing financial statements, the business took an inventory of its office supplies and found that the amount on hand was $19,000. What journal must be made to record the business' use of office supplies during the year?

Question

Quizplus · Accepted Answer

Adjusting entries are needed to bring the financial records up-to-date before the financial statements are prepared. Adjusting entries are needed if the books have not been adjusted continuously to the full accrual basis of accounting. This entry records the total amount of supplies used as an expense (beginning balance of $35,000 plus additional purchases $27,000 less amount on hand at year end $19,000 = $43,000) and credits (reduces) the balance of office supplies so that the amount equals the year-end amount on hand.

At the Beginning of the Year, a Business Had Office