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 Decembe 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. a. Supplies: The Supplies account has a $320 debit balance to start the year. No supplies were purchased during the current year. A December 31 physical count shows $120 of supplies remaining. 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. Supplies b. Supplies: The Supplies account has an $850 debit balance to start the year. Supplies of $2,200 were purchased during the current year and debited to the Supplies account. A December 31 physical count shows $675 of supplies remaining. 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 Supplies c. Supplies: The Supplies account has a $4,100 debit balance to start the year. During the current year, supplies of $9,600 were purchased and debited to the Supplies account. The inventory of supplies available at December 31 totaled $2,720. 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. Supplies