Main Street Consultants started business on January 1, 2012, and immediately pur

Question

Main Street Consultants started business on January 1, 2012, and immediately purchased $1,000 of supplies to use in the business. At the end of the month, 25 percent of the supplies remains unpaid and 20% are still on hand. What amounts should appear on the financial statements for January, 2012?

a)Income Statement, $800; Statement of Cash Flows, $250

b)Income Statement, $1,000; Statement of Cash Flows, $1,000

c)Income Statement, $800; Statement of Cash Flows, $750

d)Income Statement, $1,000; Statement of Cash Flows, $750

Explanation / Answer

Total supplies purchased 1000 supplies on hand 20% supplies expensed = 80% of 1000 800 supplies upaid 25% supplies paid - 75% of 1000 750 hence option c is correct Income statement 800 statemet of cash flow 750

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