Ask Question
26 February, 11:32

Cal Farms reported supplies expense of $2,300,000 this year. The supplies account decreased by $250,000 during the year to an ending balance of $470,000. What was the cost of supplies the Cal Farms purchased during the year?

(A) $2,550,000.

(B) $2,770,000.

(C) $1,830,000.

(D) $2,050,000.

+5
Answers (1)
  1. 26 February, 11:56
    0
    (A) : $ 2,550,000 - Cost of supplies purchases by Cal Farms

    Explanation:

    The purchases of supplies can be computed by adjusting the movement in inventory balance of supplies from the expenses for the year.

    First we determine the opening balance of supplies

    Ending inventory Supplies $ 470,000

    Add: Decrease in supplies balance during the year $ 250,000

    Opening Inventory Supplies $ 720,000

    The equation for determining the purchases is

    Opening Inventory + Purchases - Supplies Expense = Ending inventory

    $ 720,000 + Purchases - $ 2,300,000 = $ 470,000

    By solving the equation

    we get $ 720,000 - $ 470,000 + $ 2,300,000 = Purchases

    so the cost of supplies purchased by Cal farma is $ 2,550,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Cal Farms reported supplies expense of $2,300,000 this year. The supplies account decreased by $250,000 during the year to an ending ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers