If a count of office supplies on hand reveal $1,000 of supplies unused at year-end and the Office Supplies on Hand account has a balance of $2500, the adjusting entry to bring the Office Supplies on Hand up to date at year-end should include: A) Debit Office Supplies on Hand $1,000, Credit Office Supplies Expense $1,000 B) Debit Office Supplies on Hand $1,500, Credit Office Supplies Expense $1,500 C) Debit Office Supplies Expense $1,000, Credit Office Supplies on Hand $1,000 D) Debit Office Supplies Expense $1,500, Credit Office Supplies on Hand $1,500 Group of answer choices A B C D 34) If a count of office supplies on hand reveal $1,000 of supplies unused at year-end and the Office Supplies on Hand account has a balance of $2500, the adjusting entry to bring the Office Supplies on Hand up to date at year-end should include:
A) Debit Office Supplies on Hand $1,000, Credit Office Supplies Expense $1,000
B) Debit Office Supplies on Hand $1,500, Credit Office Supplies Expense $1,500
C) Debit Office Supplies Expense $1,000, Credit Office Supplies on Hand $1,000
D) Debit Office Supplies Expense $1,500, Credit Office Supplies on Hand $1,500 Group of answer choices A B C D
The correct answer and explanation is :\
The correct answer is D) Debit Office Supplies Expense $1,500, Credit Office Supplies on Hand $1,500.
Explanation:
At the end of the year, an adjustment is necessary to account for any supplies that were used up during the period. This adjustment ensures that the financial statements reflect the actual supplies used and the remaining supplies on hand.
Here’s how to break down the information provided and how we determine the correct entry:
- Office Supplies on Hand Account Balance: The Office Supplies on Hand account currently shows a balance of $2,500, which represents the value of office supplies recorded in the books.
- Count of Office Supplies on Hand: After physically counting the office supplies at year-end, it was determined that there is only $1,000 worth of supplies still unused.
- Adjustment Needed: The difference between the recorded amount of supplies ($2,500) and the actual amount on hand ($1,000) is $1,500. This indicates that $1,500 worth of supplies have been used up during the year and should be transferred to the Office Supplies Expense account.
- Adjusting Journal Entry:
- Debit Office Supplies Expense for $1,500: This records the cost of supplies used during the period as an expense.
- Credit Office Supplies on Hand for $1,500: This reduces the balance in the Office Supplies on Hand account to reflect the actual amount of supplies on hand ($1,000).
Thus, the adjusting journal entry is:
- Debit Office Supplies Expense $1,500: Recognizing the expense for supplies used up during the year.
- Credit Office Supplies on Hand $1,500: Reducing the supplies on hand to match the actual unused supplies.
Therefore, the correct choice is D) Debit Office Supplies Expense $1,500, Credit Office Supplies on Hand $1,500.