Hans Company's December 31, Year 1, balance sheet showed $800 cash, $500 supplies, $400 accounts payable, $300 common stock, and $600 retained earnings. The company experienced the following events during year 2.(1)Purchased $1,000 of supplies on account(2)Earned $2,000 cash revenue(3)Paid $1,200 cash to reduce accounts payable created in Event 1 above(4)Physical count revealed $300 of supplies on hand at the end of Year 2Based on this information, the company would report

Question

Quizplus · Accepted Answer

- Event 1 shows an increase in accounts payable by $1,000, but Event 3 shows a decrease in accounts payable by $1,200, resulting in a net decrease of $200. Therefore, the balance in the accounts payable account on the Year 2 balance sheet would be $200. 
- Cash revenue earned in Event 2 was $2,000. No information is given about cash expenses, so the net cash inflow from operating activities would be $2,000. 
- Supplies expense would be calculated as follows: 
Beginning supplies balance: $500 
Supplies purchased during Year 2: $1,000 
Supplies used during Year 2: $1,200 ($1,000 on account + $200 physically used) 
Ending supplies balance: $300 
Therefore, supplies expense for Year 2 would be $1,200.

Hans Company's December 31, Year 1, Balance Sheet Showed $800