Adjusting entries for supplies on hand at period end should be recorded as which of the following?

• A. Debit Supplies Expense for the amount used; Credit Supplies (or Supplies on Hand) for the remaining balance.
• B. Debit Supplies on Hand for the amount used; Credit Supplies Expense.
• C. Debit Cash; Credit Supplies Expense.
• D. Debit Revenue; Credit Supplies Expense.

Answer: (A)

The main idea is to match the cost of supplies used with the period and keep the ending supplies on hand as an asset. When some supplies have been consumed, you move that cost out of the Supplies asset and into Supplies Expense. The entry does this by debiting Supplies Expense for the amount used and crediting the Supplies (or Supplies on Hand) for the same amount, reducing the asset to reflect what remains on hand. This ensures the income statement shows the cost of supplies consumed and the balance sheet shows the actual supplies still on hand.