Question

Knoll Company started Year 2 with a $500 balance in its cash account, a $500 balance in Its supples account and a $1,000 balance in its common stock account. During Year 2, the company experienced the following events Pald $400 cash to purchase supplies (2) Physical count revealed $100 of supplies on hand at the end of Year 2 Based on this information which of the following journal entries would be required to recognize supplies expense at the end of Year 2? 900 O Supplies Expense Supplies 900 800 O Supplies Expense Supplies 800 O Supplies Payable Supplies 900 900 800 O Supplies Supplies Expense 800

Answer 1

Your required answer is option B

Explanation:

The consumption of supplies is an expense for the company and therefore it is transferred (Debit) to Supplies expense account and since the stock of supplies gets reduced therefore supplies account is Credited. (See below the calculation of Supplies consumption during the year 2)

Supplies in the Beginning Add: Purchase supplies during the year 2 Less: Supplies in hand at the end of Year 2 Consumption of Supplies $500 $400 ($100) $800

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