Sheldon Company began Year 1 with $1,900 in its supplies account. During the year, the company purchased $5,600 of supplies on account. The company paid $2,800 on accounts payable by year end. At the end of Year 1, Sheldon counted $3,300 of supplies on hand. Sheldon's financial statements for Year 1 would show:
A) $4,700 of supplies; $5,600 of supplies expense
B) $3,300 of supplies; $4,200 of supplies expense
C) $3,300 of supplies; $2,300 of supplies expense
D) $4,700 of supplies; $1,400 of supplies expense

Question

Quizplus · Accepted Answer

The starting balance of supplies was $1,900. During the year, $5,600 of supplies were purchased, making a total of $7,500 worth of supplies available for use. However, payments of $2,800 were made, leaving only $4,700 of supplies that Sheldon has as of year-end. To find the supplies expense, we subtract the ending balance ($3,300) from the total supplies available ($7,500), which gives us $4,200. So the financial statements would show $3,300 of supplies (the ending balance) and $4,200 of supplies expense.

Sheldon Company Began Year 1 with $1,900 in Its Supplies