Question

19. On June 1, Unidevo, Inc. purchased $1,700 worth of supplies on account. Prior to the purchase, the balance in the supplies account was $0. On December 31, the fiscal year-end for Unidevo, it is determined that $800 of supplies still remain. What is the balance in the supplies account after adjustment?

a. $800

b. $0

c. $900

d. $1,700

Answer 1

Ans:

The correct answer is Option "a" $800.

In the given case, since there is only one purchase transaction involved and the balance of supplies account before that was $0. Out of $1700 worth of supplies on hand, in the current fiscal year $900 worth of supplies were used. Hence the remaining balance of $800 itself is the balance in the supplies account after the adjustment.

Note: When supplies are purchased on account, "Supplies on hand" account is debited and "Accounts pyables" account is credited. The amount of supplies used in the current year is transferred to the income statement by using "supplies expense" account. The closing balance of "supplies on hand" is shown as a current asset in balancesheet.

Supplies on hand account
To Accounts payables	$1700	By Supplies expenses	$900
		By closing balance	$800
	$1700		$1700

Thank you,