Gates Corporation reported utilities expense of $112,800 on its income statement. The beginning balance in Utilities Payable was $8,000 and the ending balance was $4,000. The amount of cash that Gates paid for utilities during the year was $116,800.

Question

Quizplus · Accepted Answer

The cash paid for utilities is calculated by taking the reported utilities expense and adjusting for changes in the Utilities Payable account. The decrease in Utilities Payable ($8,000 - $4,000 = $4,000) indicates that more cash was paid than the expense reported, so $112,800 + $4,000 = $116,800.

Gates Corporation Reported Utilities Expense of $112,800 on Its Income