The office supplies inventory account of Tan Traders shows a balance of $1 600 on 31 December 2011.The adjusting entry to record office supplies of $550 issued to staff in the 12 months up to 31 December 2011 is:

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The adjusting entry should decrease the balance in the office supplies inventory account to reflect the supplies that were issued to staff. Therefore, we need to debit the office supplies expense account and credit the office supplies inventory account. The amount of the adjusting entry is $550, which is the value of the office supplies issued to staff. Option A would only decrease the office supplies inventory account and not recognize the expense. Option B would decrease the inventory account by too much. Option D would debit the expense account for the entire balance of the inventory account, which is not correct. Therefore, C is the best choice.

The Office Supplies Inventory Account of Tan Traders Shows a Balance