Answer: Before correcting this error:
"a. Cash is understated and Supplies is overstated"
Explanation: By incorrectly registering a debit of $ 5000 in the supply account we are exaggerating the supplies, because the registration would indicate that the company has $ 5000 in supplies, when in fact it is not.
And the cash would be underestimated because we really only spent $ 500 of cash and the registration of the credit in the cash account would indicate that the company spent $ 5000, and it really isn't.
