Provide descriptions for this transaction:Debit supplies $1,000 and Credit Account Payable $1,000a. Used supplies.b. Purchased supplies.c. Purchased supplies on credit.d. Counted supplies.e. Transfer supplies into inventory.
Question
Provide descriptions for this transaction:Debit supplies 1,000a. Used supplies.b. Purchased supplies.c. Purchased supplies on credit.d. Counted supplies.e. Transfer supplies into inventory.
Solution
a. Used supplies: This description implies that the company has used $1,000 worth of supplies for its operations. However, this doesn't match with the transaction as there is no decrease in the supplies account.
b. Purchased supplies: This description suggests that the company has bought supplies worth $1,000. This could be a possible explanation for the transaction as the supplies account is debited (increased).
c. Purchased supplies on credit: This description perfectly fits the transaction. The company has purchased supplies worth 1,000. This is why the supplies account is debited (increased) and the accounts payable account is credited (increased).
d. Counted supplies: This description implies that the company has performed an inventory count of its supplies. However, this doesn't match with the transaction as there is no change in the supplies account that would reflect a count or revaluation.
e. Transfer supplies into inventory: This description suggests that the company has moved supplies into its inventory. However, this doesn't match with the transaction as there is no corresponding credit to the supplies account or debit to the inventory account.
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