On March 1, Schultze and Daughters reported a balance in Supplies of $500. During March, the company purchased supplies (properly recorded) for $1,900 and consumed supplies of $1,600.
If no adjusting entry is made for supplies at the end of the month:

Question

Quizplus · Accepted Answer

Required month-end entry:
Supplies expense $1,600
$\quad $ $\quad $ $\quad $ Supplies $1,600
(to record supplies consumed during March)
Failure to record Supplies Expense understates expense and thus overstates net income by $1,600 for the month. Failure to record supplies (an asset) consumed, overstates assets on the Balance Sheet.

On March 1, Schultze and Daughters Reported a Balance in Supplies