Question

On january 1, 20x2, the ledger of global corporation correctly showed supplies inventory of $500. during 20x2, supplies purchases amounted to $700. a count (inventory) of supplies on hand at december 31, 20x2, showed $400. the 20x2 statement of earnings should report supplies expense amounting to which of the following?

a. $800.
b. $1,100.
c. $700.
d. $1,200.

Answer 1

The supplies expense for Global Corporation in 20x2 should be reported as $800 on the statement of earnings. This is calculated as beginning inventory plus purchases minus the ending inventory. Therefore, the statement of earnings for 20x2 should report a supplies expense of $800 (a).

Step-by-step explanation:

The calculation of supplies expense for Global Corporation for the year 20x2 requires adjusting the beginning supplies inventory and purchases by the amount of supplies left at year-end. The formula to calculate supplies expense is:

Supplies Expense = Beginning Inventory + Purchases - Ending Inventory

Here, the company had a beginning inventory of supplies worth $500 and made additional purchases totaling $700. At the end of the year, an inventory count showed $400 of supplies remaining. Utilizing the formula:

$500 (Beginning Inventory) + $700 (Purchases) - $400 (Ending Inventory) = $800

Therefore, the statement of earnings for 20x2 should report a supplies expense of $800.