The Firm-Accountants
Trial Balance at 30 June 2024 (Extract)
Chart of Account
Account
DR
CR
Paper Supplies on Hand 17,000
130
After an inspection and before any adjustment to the trial balance paper supplies was audited by the Accountant of The Firm-Accountants and it was estimated that Paper Supplies on Hand amounted to $9,500.
What would be the general journal entry to record the adjustment as at the 30 June 2024?
O Debit (DR): Paper Supplies on Hand $9,500 and Credit (CR): Paper Supplies expense $9,500.O Debit (DR): Paper Supplies on Hand $7,500 and Credit (CR): Paper Supplies expense $7,500.O Debit (DR): Paper Supplies expense $7,500 and Credit (CR): Paper Supplies on Hand $7,500O Debit (DR): Paper Supplies expense $9,500 and Credit (CR): Paper Supplies on Hand $9,500.O Debit (DR): Paper Supplies expense $17,000 and Credit (CR): Paper Supplies on Hand $17,000.
The general journal entry to record the adjustment as at 30 June 2024, based on the audit estimate that Paper Supplies on Hand should be $9,500, would be:
O Debit (DR): Paper Supplies on Hand $7,500 and Credit (CR): Paper Supplies expense $7,500.
This entry reduces the inventory account (Paper Supplies on Hand) by the overstatement amount ($17,000 - $9,500 = $7,500) and recognizes the decrease in value as an expense (Paper Supplies expense) for the period.
