On January 1, Nash, Inc. had $2,000 of supplies on hand. During January, Nash purchased $5,500 worth of new supplies. At the end of the month, a count revealed $700 worth of supplies remaining on the shelves. The adjusting entry needed will include a debit to Supplies Expense of $6,800. The supplies were initially recorded as an asset.

Question

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The supplies used during January are calculated as the beginning balance ($2,000) plus purchases ($5,500) minus the ending balance ($700), which equals $6,800. This amount should be debited to Supplies Expense.