Read Along With the VideoTranscript
We're doing another example of adjusting entries, and this time it's gonna be supplies. So let's take a look at supplies and see how that's gonna show up on your test or your quizzes or whatever. On May 1, we purchased $1,000 of supplies. Supplies on hand May 31 were $200. So we're looking for the journal entry for May 31, the adjusting entry. So you see in this one, it doesn't tell us how much we used. I mean, you can figure it out, but it just says how much we have left over. So let's look at a T-account for supplies.
Now, I understand this one's very simple, but you're gonna have ones that aren't so simple. So supplies is an asset. We know that on May 1, we put $1,000 in, and we know that on May 31, we had $200 left over. So that leaves us with an $800 decrease in supplies, right? $1,000 minus $800 is $200. So this is the entry that we need to make. We need to get this $800 on the books. So I always like to start with the original just so I know what I'm dealing with. So May 1, $1,000 into the supplies account.
And just assume we paid for them with cash. So that's our original entry. Then on May 31, $800 of these supplies here have been used up. So that means we have turned what was an asset into an expense. So we're going to call it supplies expense of $800, and we're gonna decrease the supplies account by $800. So we've done a credit to supplies of $800, which matches with this blank that we filled in over here.