Sheldon Company began Year 1 with $900 in its supplies account. During the year

Question

Sheldon Company began Year 1 with $900 in its supplies account. During the year the company purchased $2,600 of supplies on account. The company paid $1,800 on accounts payable by year end. At the end of Year 1, Sheldon counted $1,300 of supplies on hand. Sheldon's financial statements for Year1 would show: Multiple Choice $1,700 of supplies, $400 of supplies expense $1,300 of supplies; $1,300 of supplies expense $1,300 of supplies, $2.200 of supplies expense 51,700 of supplies; $2600 of supplies expense

Explanation / Answer

a) C option is correct answer

As given in the question, supplies balance as at year end is $ 1,300 and the supplies expense will be calculated as follows

Expense = Opening Stock + Purchases - Closing Stock

= 900 + 2,600 - 1,300

= $ 2,200

b) C option is correct answer

On taking advance on 1 November the following entry will be passed in the books of accounts

Cash (Asset) debit 6,000

Advance from customer (Liability) credit 6,000

On year end the following adjustment entry will be passed in the books of accounts

Advance from customer debit $ 2,000

Revenue credit $ 2,000

Hence it shows that on passing the above adjustment liability will decrease and income will increase

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.