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. b. Supplies: The Supplios account has an $1,600 debit balance to start the year. Supplies of $3,700 were purchased during the current year and debiled to the Supplies account. A December 31 physical count shows $1,050 of supplies b. Supplies: The Supplies account has an $1,600 debit balance to start the year. Supplies of $3,700 were purchased during the current year and deblted to the Supplies account. A December 31 physical count shows $1,050 of 5 upplies 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. c. Supplies: The Supplies account has a $5,600 debit balance to start the year. During the current year, supplies of $12,600 were purchased and debited to the Supplies account. The inventory of supplies available at December 31 totaled $3,620