Problem:
Becca Corp. purchased supplies at a cost of $5,200 during 2014. At January 1, 2015, supplies on hand were $1,600. During the year, the company used $4,000 of supplies. Becca's accounting year ends on December 31.
Required:
Question 1: What is the effect on the accounting equation of the adjusting entry that is prepared at December 31, 2015?
Question 2: Under the accrual basis of accounting, how much is Supplies Expense for 2015?
Question 3: How much should be reported on the December 31, 2015 balance sheet for Supplies?
Question 4: What type of adjustment was made in part A?
Note: Please provide reasons to support your answer.