On January 1, 2010, Grey Corporation had $1,000 of office supplies on hand. During the year, Grey purchased $10,000 of office supplies on credit. Payments to vendors for those supplies during 2010 totaled $8,400. At the end of the accounting period, only $1,300 of the supplies remained in Grey's supply cabinet. How much office supplies expense should Grey recognize for 2010?

Question

Quizplus · Accepted Answer

Grey Corporation should recognize $9,700 as office supplies expense for 2010. This is calculated by starting with the total supplies available during the year ($1,000 beginning balance + $10,000 purchases = $11,000), then subtracting the ending inventory of supplies ($1,300) to find the amount used or consumed during the year, which is $9,700 ($11,000 - $1,300 = $9,700). This amount represents the office supplies expense for the year.

On January 1, 2010, Grey Corporation Had $1,000 of Office