Answer: In your entry you should debit a loss account and credit a reduction in your asset. Eg
Office Suplies Loss 805
Office Supplies 805
Explanation: Once you record the entry above the balance of account Office Suplies should be reduced from 2050 to 1245. By this way, the reality (physical count) and the accounting match.
Answer:
Debit Supplies Expense $805 and credit Supplies $805.
Explanation:
The variance or discrepancy between the physical count of supplies on hand and the general ledger balance must be corrected. this is done by passing an adjustment entry that will bring the general ledger balance in line with the physical inventory.
The difference between the physical count and the system balance is $805, To bring the book balance to reflect the physical count value, we need to reduce the value from $2,050 to $1,245 by passing a credit entry to Supplies account and a corresponding debit to Supplies expenses account.
The International Accounting standard requires inventories be measured at the lower of cost and net realisable value (NRV).
