1. At the beginning of 2014 , Dong Company had $1,000 of supplies on hand. During 2014 , the company purchased supplies amounting to $6,400 (paid for in cash and debited to Supplies Expense). At December 31, 2014, the Company had only $2,600 worth of supplies on hand. The adjusting entry Dong Company would record on December 31, 2014, to adjust the Supplies Inventory account would include a a. Debit to Supplies Inventory for $2,600. b. Credit to Supplies Expense for $1,600. c. Credit to Supplies Inventory for $4,800. d. Debit to Supplies Expense for $4,800. 2. When using the allowance method, as bad debt expense is recorded, a. Total assets remain the same and shareholders' equity remains the same. b. Total assets decrease and shareholders' equity decreases. c. Total assets increase and shareholders' equity decreases. d. Total liabilities increase and shareholders' equity decreases. 3. If a company reported the following items on its statement of earnings (cost of sales $100,000, income tax expense $40,000, interest expense $10,000, operating expenses $70, 000 , sales revenue $280,000 ), what amount would be reported for the subtotal "earnings from operations"? a. $180,000 b. $60,000 c. $100,000 d. $110,000