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Problem 1: The Supplies account had a balance at the beginning of year 3 of $8,000 (before the reversing entry). Payments for purchases of supplies during year 3 amounted to $50,000 and were recorded as expense. A physical count at the end of year 3 revealed supplies costing $14,500 were on hand. Reversing entries are used by this company. The required adjusting entry at the end of year 3 will include a debit to:
Option 1: Supplies Expense for $43,500.
Option 2: Supplies for $6,500.
Option 3: Supplies for $14,500.
Option 4: Supplies Expense for $6,500.
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