A company purchased supplies during the year totaling $10,000. At the end of the year, they made an adjusting entry to record $3,000 of supplies that had been used during the year. The ending balance in the Supplies account after the adjustment was $12,000. The beginning balance in the Supplies account was:

Question

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The ending balance in the Supplies account after the adjustment was $12,000, which is the sum of the beginning balance plus the supplies purchased during the year, minus the supplies used during the year. Therefore, $12,000 = beginning balance + $10,000 - $3,000. Solving for the beginning balance, we get $5,000.

A Company Purchased Supplies During the Year Totaling $10,000