Delto Company stoned Year 2 with o $1,700 in cash, $700 in supplies, and $2,400

Question

Delto Company stoned Year 2 with o $1,700 in cash, $700 in supplies, and $2,400 in common stock accounts During Year 2 the company experienced the following events Paid $1.600 cash to purchase supplies. Physical count revealed $400 of supplies on hand at the end of Year 2 Based on this information the year-end adjusting entry to recognize supplies expense would cause Based on this information the year-end adjusting entry to recognize supplies expense would cause total assets to decrease by $400. total expenses to increase by $700 total stockholder's equity to decrease by $1.900. cash flow from operating activities to decrease by $1,100.

Explanation / Answer

3 Journal entries to record the events Account Titles Debit Credit 1 Supplies 1600 Cash 1600 Adjusting Entry 2 Supplies expense 1900 Supplies 1900 From the above, it can be see that expenses(supplies exp) increase by 1900, thereby decreasing the net profit for the year and thus decreasing stockholders' equity So, the Adjusting Entry would cause total stockholders' equity to decrease by $ 1900

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