Cal Farms reported supplies expense of $2,000,000 this year. The supplies account decreased by $200,000 during the year to an ending balance of $400,000. What was the cost of supplies the Cal Farms purchased during the year?

Question

Quizplus · Accepted Answer

The cost of supplies purchased during the year can be calculated as beginning supplies balance + supplies purchased – ending supplies balance. Therefore, supplies purchased = ending supplies balance – beginning supplies balance + supplies expense = $400,000 - ($400,000 - $200,000) + $2,000,000 = $1,800,000. Therefore, the best choice is B.

Cal Farms Reported Supplies Expense of $2,000,000 This Year