Question

The supplies account of ABC Corp. on December 31 shows a balance of $4,000. An actual count of the supplies shows the balance is $3,400. 4. What should be recorded to the accounting equation to adjust the balance in the supplies account to properly reflect the balance at December 31? a. Assets Liabilities Equity

2. if above transaction is not recovered at the end of the month december assets will be (over or understated), expenses will be (over or understated) and net income will be (over or understated)

this question has two parts. in the first part, make sure to use plus or minus to indicate whether the amount goes up or down and label the account ie "accounts recieveable +500 <--this is an examples not the right answer)

Answer 1

Answer

Assets	Liabilities	Equity
Supplies		Supplies expense
decrease by $ 600 [4000 - 3400 = 600]		will increase which will lead to decrease in Equity by $ 600

  If above transaction is not recovered at the end of the month December, assets will be overstated [by $600], expenses will be understated [by $ 600] and net income will be overstated [by $ 600]