Question

Hi! Please EXPLAIN by adjusting entry with T-account for this PROBLEM

THANKS!

*105.    The Supplies account had a balance at the beginning of year 3 of $8,000 (before the reversing entry). Payments for purchases of supplies during year 3 amounted to $50,000 and were recorded as an expense. A physical count at the end of year 3 revealed supplies costing $11,500 was on hand. Reversing entries are used by this company. The required adjusting entry at the end of year 3 will include a debit to:

            a.   Supplies Expense for $3,500.

            b.   Supplies for $3,500. (correct answer: $11,500 + $8,000 – $8,000 = $11,500.)

            c.   Supplies Expense for $46,500.

            d.   Supplies for $11,500.

Answer 1

	balance at the beginning of year 3	$8,000
	purchases of supplies	50000
	balance at the end of year 3	11500
		Dr	Cr
	Supplies expense	$ 3,500.00
	To Supplies		$ 3,500.00
	Actual Supplies Expense = Beginning Supplies + Purchases Supplies - Ending Supplies
	= $8000+50000-11500
	$                                                                              46,500.00
	Supplies Expenses Debited in books at the time of purchase = $50000
	Thus Supplies Expense is to be reduced $3500 [50000-46500] with corresponding bebit to Supplies Account