A Physical Count of Supplies on Hand at the End

question 20

Multiple Choice

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 Supplies 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.

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Definitions:

Winding Up Stage

The process of concluding the affairs of a business or partnership, leading to its dissolution.

Dissolution

The formal disbanding of a partnership, corporation, or other business entity. For instance, partnerships can be dissolved by acts of the partners, by operation of law, or by judicial decree.

Partnership Assets

Resources or items of value owned by a partnership that are used in the operation of the business and subject to division among partners according to their agreement.

Voluntary Dissociation

The act of a member choosing to leave a partnership or business entity according to the agreement terms or state law.