Question

The don't bite me pest control company has 11,400 gallons of insecticide supplies on hand that cost $342,000; a bill from the vendor for $240,000 of these supplies has not yet been paid. the company expects to earn $814,000 for its services when it uses the insecticide supplies. the company's balance sheet would include an asset, supplies, in the amount of:

Answer 1

$342,000

Regardless if the amount of supplies has not been paid or not, it is still accounted for in the balance sheet. You would have a debit of 342,000 for supplies, credit of supplies payable of 240,000 and a credit to cash for 102,000 assuming that the difference between both amounts was paid for with cash.