Question

The Don't Bite Me Pest Control Company has 10,000 gallons of insecticide supplies on hand that cost $300,000; a bill from the vendor for $100,000 of these supplies has not yet been paid. The company expects to earn $800,000 for its services when it uses the insecticide supplies. The company would report a supplies asset in the amount of: A. $10,000B. $200,000C.$300,000D. $800,000

Answer 1

The Don't Bite Me Pest Control Company would report a supplies asset in the amount of $300,000. To calculate the value of the supplies asset, subtract the unpaid bill from the total cost of the supplies. This means the company has $200,000 worth of supplies that have been paid for and would be reported as a supplies asset.

Step-by-step explanation:

The Don't Bite Me Pest Control Company would report a supplies asset in the amount of $300,000.

To calculate the value of the supplies asset, we need to subtract the unpaid bill from the total cost of the supplies. The supplies cost $300,000, but there is a bill of $100,000 that has not been paid yet. So, the supplies asset would be $300,000 - $100,000 = $200,000.

This means that the company has $200,000 worth of supplies that have been paid for, and this amount would be reported as a supplies asset. Option B is correct .

Answer 2

C.$300,000

Step-by-step explanation:

Data provided in the question

Number of gallons required = 10,000

Cost of supplies on hand = $300,000

Not paid amount = $100,000

Earning from services = $800,000

So by considering the above information, the supplies assets should be recorded at cost or net realizable value whichever is lower

So in this case, the supplies value is $300,000 and the same is to be recorded in the financial statements