The Supplies account contains the value of general office or warehouse supplies, such as pens, paper, and notebooks. We adjust the account for the amount of supplies used up during the period.

Concept #1: Adjusting Journal Entries: Supplies (Accrual Accounting Method)

Concept #2: Adjusting Journal Entries: Supplies (Cash Basis to Accrual Method)

Practice: A company has $350 in its supplies account at the beginning of the year. Throughout the year, the company purchased an additional $500 worth of supplies, which it recorded to the supplies account. The year-end count of office supplies revealed a remaining balance of $400. The entry to adjust the balance of the supplies account would include:

Additional Problems
A company started the year with no supplies. During this year they bought $200 worth of supplies on account and later paid $150 of this debt. If there were $40 supplies left at the end of this year, what was the supply expense for the period? A. $160 B. $50 C. $40 D. $10
What will be the result if no adjusting entry is made at the end of the accounting period to record the actual use of supplies? a. Liabilities would be overstated b. Assets would be overstated c. Assets would be understated d. Liabilities would be understated
The supplies account shows a beginning balance of $3,000. Assume the supplies account shows a debit for $5,500 representing supplies purchased during the period and the supplies inventory at year-end is $1,700. The adjusting entry involves a: A) debit to supplies expense for $6,800 B) debit to supplies for $1,700 C) debit to supplies for $6,800 D) debit to supplies expense for $1,700
A company began operations and purchased $6,000 of supplies. By year-end, $2,700 was still on hand. The adjusting entry at year end would include a: A) debit to supplies of $6,000 B) debit to supplies expense for $2,700 C) credit to supplies for $3,300 D) credit to supplies for $2,700
How does purchasing supplies for cash effect the accounting equation? a) Increase assets. b) Decrease stockholders' equity. c) Decrease liabilities. d) No effect.
Data Corporation made several purchases of office supplies totaling $3,310 during its first year of operations and recorded all purchases by debiting the asset account Office Supplies. At December 31, the amount of unused supplies on hand was determined by count to amount to $1,460. The proper adjusting entry would be: a. Debit Office Supplies Expense $1,460 and credit Office Supplies $1,460. b. Debit Accounts Payable $3,310 and credit Office Supplies $3,310. c. Debit Office Supplies $1,460 and credit Office Supplies Expense $1,460. d. Debit Office Supplies Expense $1,850 and credit Office Supplies $1,850.
What will be the result if no adjusting entry is made at the end of the accounting period to record the actual use of supplies? a. Liabilities would be overstated b. Assets would be overstated c. Assets would be understated d. Liabilities would be understated 
A company purchased office supplies on credit. What two accounts are affected by the transaction? A) Supplies and Cash B) Supplies and Accounts Payable C) Equipment and Accounts Payable D) Stockholders' Equity and Accounts Payable
Wong Company purchased office supplies costing $6,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $2,400 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be a. Debit Office Supplies Expense, $2,400; Credit Office Supplies, $2,400. b. Debit Office Supplies, $3,600; Credit Office Supplies Expense, $3,600. c. Debit Office Supplies Expense, $3,600; Credit Office Supplies, $3,600. d. Debit Office Supplies, $2,400; Credit Office Supplies Expense, $2,400.
On January 1, 2007, the ledger of Global Corporation correctly showed supplies inventory of $1,000. During 2007, supplies purchases amounted to $5,000. A physical count of inventory on hand at December 31, 2007, showed $1,200. The 2007 income statement should report supplies expense amounting to  A. $ 6,000. B. $ 5,200. C. $ 4,800. D. $ 1,000.
Beck Company had $600 of supplies on hand at January 1, 2006. During 2006, supplies costing $6,000 were purchased. At December 31, 2006 a physical count revealed that Beck Company had $400 of supplies on hand. After the adjusting entries for 2006 are recorded and posted, the balances in the supplies account and the supplies expense account would be: A. supplies $6,000 and supplies expense $400 B. supplies $400 and supplies expense $6,400 C. supplies $400 and supplies expense $6,200 D. supplies $400 and supplies expense $6,600 E. supplies $6,200 and supplies expense $6,200
A company purchased with cash supplies that will be consumed during future months. Which of the following does not correctly describe the impact on the financial statements when the supplies are used during future months? A. Total assets will remain unchanged. B. Total assets will decrease. C. Operating expenses will increase. D. Operating income will decrease.
What will be the result if no adjusting entry is made at the end of the accounting period to record the actual use of supplies? a. Liabilities would be overstated b. Assets would be overstated c. Assets would be understated d. Liabilities would be understated