A Physical Count of Supplies on Hand at the End

question 99

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 $2,100.
• B) Debit Prepaid Supplies $850 and credit Supplies Expense $850.
• C) Debit Supplies $1,250 and credit Cash $1,250.
• D) Debit Supplies Expense $1,250 and credit Supplies $1,250.
• E) Debit Supplies Expense $850 and credit Supplies $850.

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Definitions:

Incurred Costs

Expenses that have been realized in the course of business operations.

Alternatives

Different options or choices available in a decision-making process.

Traceable

Costs or items that can be directly linked or attributed to a specific product, job, or department, facilitating accurate costing and financial analysis.

Avoidable Cost

A cost that can be eliminated by choosing one alternative over another in a decision. This term is synonymous with differential cost and relevant cost.