Mrs. Beard's Bagels purchases its inventory, on account, daily. At December 31 the company had taken receipt of $40,000 of inventory from its suppliers which had not been recorded in the accounts.
If Mrs. Beard makes the appropriate adjusting entry, how much will be reported on the December 31 balance sheet as accounts payable?

Question

Quizplus · Accepted Answer

The correct amount to be reported as accounts payable is $40,000, which represents the inventory received but not yet recorded in the accounts. This adjusting entry ensures that the expense is matched with the period in which the inventory was received, adhering to the accrual basis of accounting.

Mrs Beard's Bagels Purchases Its Inventory, on Account, Daily