A total of $3,700 in supplies was purchased during the year. By the end of the year, the company had used $2,200 of the supplies. The adjusting entry needed at the end of the year is:
A)debit Supplies $2,200; credit Supplies Expense $2,200
B)debit Supplies Expense $3,700; credit Supplies $3,700
C)debit Supplies Expense $1,500; credit Supplies $1,500
D)debit Supplies Expense $2,200; credit Supplies $2,200

Question

Quizplus · Accepted Answer

The adjusting entry needed at the end of the year is to recognize the supplies that have been used, which is Supplies Expense. The amount that needs to be recognized is $2,200 (the difference between the total supplies purchased and the supplies on hand at the end of the year). Therefore, the adjusting entry should debit Supplies Expense for $2,200 and credit Supplies for $2,200. Option A is incorrect because it only recognizes the supplies that have been used and does not account for the remaining supplies on hand. Option B is incorrect because it reverses the original entry and would result in overstating expenses. Option C is incorrect because it does not take into consideration the total supplies purchased or the supplies on hand at the end of the year.

A Total of $3,700 in Supplies Was Purchased During the Year