bok nt nt QS 3-6 (Algo) Prepaid (deferred) expenses adjustments LO P1 For each separate case below, follow the three-step process for adjusting the Supplies asset account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year. ences a. Supplies: The Supplies account has a $600 debit balance to start the year. No supplies were purchased during the current year. A December 31 physical count shows $260 of supplies remaining. DR or CR? Supplies Step 1: Determine what the current account balance equals. $ 600 Debit 600 340 Step 2: Determine what the current account balance should equal. $ 340 Debit 340 Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Adjusting Entry Debit Credit Supplies expense 600 Supplies 340 b. Supplies: The Supplies account has an $1,550 debit balance to start the year. Supplies of $3,600 were purchased during the current year and debited to the Supplies account. A December 31 physical count shows $1,025 of supplies remaining. < Prev 7 of 21 Next >