Tracy,Inc. Tracy,Inc.adjusts its books each month but closes its books at the end of the year.The trial balance at July 31 before adjustments is as follows:
Refer to the trial balance for Tracy,Inc.
On July 31,the amount of supplies on hand is $520.What amount is reported in the July income statement for supplies expense?

Question

Tracy,Inc. Tracy,Inc.adjusts its books each month but closes its books at the end of the year.The trial balance at July 31 before adjustments is as follows:
 Refer to the trial balance for Tracy,Inc.
On July 31,the amount of supplies on hand is $520.What amount is reported in the July income statement for supplies expense?

Quizplus · Accepted Answer

Since the trial balance is before adjustments, the supplies expense account is most likely not up-to-date. To find the actual amount used, there must be an adjustment made. Assuming that the company started with $0 supplies on hand, the amount used is the difference between the July 31 supplies on hand and the supplies purchased. From the trial balance, we know that Tracy, Inc. purchased $1,300 worth of supplies during the period. Therefore, the amount of supplies used is $1,300 - $520 = $780. This amount will be reported in the July income statement for supplies expense. Option D is the correct answer.

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