A company started the year with $400 of supplies.During the year,the company purchased an additional $1,200 of supplies.There were $700 of supplies on hand at the end of the year.An adjusting entry prepared at the end of the accounting period includes a:

Question

Quizplus · Accepted Answer

To calculate the cost of supplies used during the year, we need to subtract the ending balance of supplies from the total supplies available (beginning balance + purchases). 
Total supplies available = $400 (beginning balance) + $1,200 (purchases) = $1,600 
Supplies used during the year = $1,600 - $700 (ending balance) = $900 
Since supplies used during the year is an expense, we need to debit Supplies Expense for $900 and credit Supplies for $900 in the adjusting entry.

A Company Started the Year with $400 of Supplies