The balance in the supplies account, before adjustment at the end of the year is $725. The proper adjusting entry if the amount of supplies on hand at the end of the year is $300 would be
A) debit Supplies, $300; credit Supplies Expense, $300
B) debit Supplies Expense, $425; credit Supplies, $425
C) debit Supplies Expense, $300; credit Supplies, $300
D) debit Supplies, $425; credit Supplies Expense, $425

Question

Quizplus · Accepted Answer

The supplies used during the year is $725 - $300 = $425. Therefore, the adjusting entry should debit Supplies Expense for $425 and credit Supplies for $425 to reflect the expense incurred.

The Balance in the Supplies Account, Before Adjustment at the End