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Sheldon Company began 2016 with $1,200 in its supplies account. During the year, the company purchased $3,400 of supplies on account. The company paid $3,000 on accounts payable by year-end. On December 31, 2016, Sheldon counted $1,400 of supplies on hand.
Sheldon’s financial statements for 2016 would show:

A. $1,600 of supplies; $200 of supplies expense.
B. $1,400 of supplies; $2,000 of supplies expense.
C. $1,400 of supplies; $3,200 of supplies expense.
D. $1,600 of supplies; $3,400 of supplies expense.

Answer :

Answer:

The correct option is C,$1400 of supplies and $3200 of supplies expense

Explanation:

First of all, the amount to be shown as balance in supplies account as at 31st December  is the closing inventory of supplies given as $1400.00 in the question.

However, the amount of supplies expense in the year is computed thus

Opening balance of supplies                     $1200

add supplies bought                                    $3400

less closing supplies                                   ($1400)

Supplies expenses                                       $3200

The accounts payable balance on supplies would be $400($3400-$30000, that is the amount of supplies purchased less cash paid

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