1. If the supplies account is not adjusted, which of the following would occur?

1. Assets and expenses would be overstated.
2. Assets and expenses would be understated.
3. Assets would be understated, and expenses would be overstated.
4. Net income and stockholders' equity would be overstated.

2. Prior to recording adjusting entries, the office supplies account had a $360 debit balance. A count of the supplies showed $105 of unused supplies remaining. The required adjusting entry is

1. debit Office Supplies, $105; credit Office Supplies Expense, $105.
2. debit Office Supplies Expense, $105; credit Office Supplies, $105.
3. debit Office Supplies Expense, $255; credit Office Supplies, $255.
4. debit Office Supplies, $255; credit Office Supplies Expense, $255.