Question

On January 1, Year 2, the Supplies account of Sheldon Company had a balance of $1,200. During the year, the company purchased $3,400 of supplies on account and made partial payments totaling $3,000 on those accounts. On December 31, Year 2, Sheldon determined that there were $1,400 of supplies on hand. Which of the following would be reported on Sheldon’s Year 2 financial statements?
A.$1,600 of supplies; $200 of supplies expense
B.$1,400 of supplies; $2,000 of supplies expense
C.$1,400 of supplies; $3,200 of supplies expense
D.$1,600 of supplies; $3,400 of supplies expense

Answer 1

Answer:

C. $1,400 of supplies; $3,200 of supplies expense

Explanation:

The computation of the supplies expense is shown below:

= Supplies balance + purchase of supplies - supplies on hand

= $1,200 + $3,400 - $1,400

= $3,200

So, the supplies expense would be recorded at $13,200

And, the supplies on hand for $1,400 should also be reported in the books of accounts.

The partial payment should not be consider. Hence, ignored it

Hence, option C is correct.