During Its First Period of Operations, Durawash Laundry Purchased $8,000

question 158

Multiple Choice

During its first period of operations, Durawash Laundry purchased $8,000 worth of supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the supplies indicated only $3,000 on hand. The adjusting entry that should be made by the company on June 30 is

• A) Debit Supplies Expense, $3,000; Credit Supplies, $3,000.
• B) Debit Supplies, $3,000; Credit Supplies Expense, $3,000.
• C) Debit Supplies, $5,000; Credit Supplies Expense, $5,000.
• D) Debit Supplies Expense, $5,000; Credit Supplies, $5,000.

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Definitions:

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide the preparation of financial statements globally.

Convertible Notes

A form of short-term debt that converts into equity, typically in conjunction with a future financing round, under specific terms.

Interest Expense

The cost incurred by an entity for borrowing funds, typically reported on the income statement.

Basic EPS

A measure of a company's performance that divides earnings available to common shareholders by the average number of common shares outstanding.