At the end of the month, the Supplies (asset) account of Tony\'s Toy Shop reflec

Question

At the end of the month, the Supplies (asset) account of Tony's Toy Shop reflects a balance of $2,000. When she counts her office supplies, she finds that only $600 worth is still left. What end-of-period adjustment should Betty make? Select one: a. None of the other options b. Decrease Office Supplies (asset) by $1,400 and decrease Office Supplies Expense by $1,400. c. Decrease Office Supplies (asset) by $1,400 and increase Office Supplies Expense by $1,400. d. Decrease Office Supplies (asset) by $600 and increase Office Supplies Expense by $600.

Explanation / Answer

c. Decrease Office Supplies (asset) by $1,400 and increase Office Supplies Expense by $1,400.

This is the answer , since the actual inventory in her hand is only $600 ,she should reduce the asset by increasing her expense(the expense would have been unrecorded nature)

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