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A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,250 of supplies on hand. The general ledger balance before any adjustment is $2,100. What is the adjusting entry for office supplies that should be recorded on May 31?A)Debit Supplies Expense $1,250 and credit Supplies $1,250.B)Debit Prepaid Supplies $850 and credit Supplied Expense $850.C)Debit Supplies Expense $1,250 and credit Supplies $2,100.D)Debit Supplies $1,250 and credit Cash $1,250.E)Debit Supplies Expense $850 and credit Supplies $850.

Respuesta :

Answer:

E)Debit Supplies Expense $850 and credit Supplies $850.

Explanation:

The inventory/supplies balance at the end of the period in which a count was conducted has to be adjusted to reflect the amount of stock/supplies available at the end of the period.

Given that the count indicates that there are $1,250 of supplies on hand and the book balance is $2,100,

The difference is

= $2,100 - $1,250

= $850

Entries required

Debit Supplies Expense $850

Credit Supplies $850.

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