Question

Yard Professionals Inc. experienced the following events in 2018, its first year of operation:

Performed services for $35,000 cash.
Purchased $6,000 of supplies on account.
A physical count on December 31, 2018, found that there was $1,800 of supplies on hand.
What is the balance in the Supplies account as of January 1, 2019?
What is the balance in the Supplies Expense account as of January 1, 2019?

Answer 1

The balance in the Supplies account as of January 1, 2019, is $2,000. The balance in the Supplies Expense account as of January 1, 2019, is $3,000.

Step-by-step explanation:

The balance in the Supplies account as of January 1, 2019, can be determined by considering the relevant events in 2018. The Supplies account represents the amount of supplies the company has on hand. If we assume that the company started with a zero balance in the Supplies account and only recorded two events related to supplies, we can calculate the balance as follows:

1. The company purchased $5,000 worth of supplies throughout the year. This increases the balance in the Supplies account by $5,000.
2. The company used $3,000 worth of supplies throughout the year. This decreases the balance in the Supplies account by $3,000.

Therefore, the balance in the Supplies account as of January 1, 2019, would be $5,000 - $3,000 = $2,000.

The Supplies Expense account represents the amount of supplies consumed during the year. To calculate the balance in the Supplies Expense account as of January 1, 2019, we need to consider the events related to supplies:

1. The company purchased $5,000 worth of supplies throughout the year. This does not affect the balance in the Supplies Expense account as it represents the cost of supplies consumed, not purchased.
2. The company used $3,000 worth of supplies throughout the year. This increases the balance in the Supplies Expense account by $3,000.

Therefore, the balance in the Supplies Expense account as of January 1, 2019, would be $3,000.