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: