Reflection on Supplies Account Balance and Expense Calculation

What would be reported on Sheldon's Year 2 financial statements based on the supplies account data?

a. $2300 of supplies; $1800 of supplies expense

b. $3200 of supplies; $900 of supplies expense

c. $3200 of supplies; $4100 of supplies expense

d. $2300 of supplies; $3200 of supplies expense

Answer:

$2300 of supplies; $3200 of supplies expense

Reflecting on the supplies account data of Sheldon Company for Year 2, it is evident that the correct reporting on the financial statements would be $2300 of supplies and $3200 of supplies expense. This calculation is based on the balances and transactions made throughout the year.

Initially, the Supplies account had a balance of $1400. During the year, the company purchased $4100 of supplies on account and made partial payments totaling $2300 on those accounts. On December 31, Year 2, it was determined that there were $2300 of supplies still on hand.

The computation of the supplies expense is as follows:

Supplies expense = $1,400 + $4,100 - $2,300 = $3,200

Therefore, the correct reporting on Sheldon's Year 2 financial statements would be $2300 of supplies and $3200 of supplies expense. The journal entry for this adjustment would also be recorded accordingly for better understanding:

Supplies expense A/c Dr $3,200

To supplies A/c $3,200

(Being supplies account is adjusted)

It is essential to accurately report such financial details to provide a clear picture of the company's financial position and performance during the specified period.