At December 31, 2007, the end of Smith and Jones Co. fiscal year,there were $470

Question

At December 31, 2007, the end of Smith and Jones Co. fiscal year,there were $470 of office supplies on hand. During 2008, $1,800 ofoffice supplies were purchased and charged to the Office SuppliesExpense account. On December 31, 2008, a physical count of officesupplies revealed that there was $700 worth on hand. As a result ofthis information, the bookkeeper will have to
      increase an assetaccount by $230
       increase an expense account by $230
       increase an asset account by $700
       increase an expense account by $1570

Explanation / Answer

Office supplies on hand reported on Dec 31, 2007 470.00 Office Suppliespurchased 1,800.00 Office supplies as reportedon Dec31, 2008 700.00 Hence Office suppliesExpense 1,570.00 ( Opening supplies +Purchases - Closing Supplies ) Hence, Book keeper will have to Increase an Expense account by$1570.

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