Question1(i) The Supplies account had a balance of $1,200 at the beginning of the year and was debited during the year for $3,600, representing the total of supplies purchased during the year. If $1,000 of supplies are on hand at the end of the year, the supplies expense to be reported on the income statement for the year is: (1 mark) $2,600 $3,800 None of the options are correct $3,600 $1,000 ResetMaximum marks: 1 Flag question undefined

Question

BlackTom AI · Accepted Answer

To determine the supplies expense, we use the formula: Beginning supplies + Purchases - Ending supplies = Supplies used (expense).

Option analysis:
- "$2,600": This would imply a miscalculation where either ending supplies or purchases were treated incorrectly. If beginning is 1,200 and purchases are 3,600, using the ending balance of 1,000 would yield 1,200 + 3,600 - 1,000 = 3,800, not 2,600. Therefore this option is incorrect.
- "$3,800": This is the correct calculation: 1,200 (beginning) + 3,600 (purchases) - 1,000 (ending) = 3,800. It accurately represents the supplies used during the year and thus the supplies expense on the income statement.
- "None of the options are correct": Since a correct calculation exists yielding 3,800, this statement is false.
- "$3,600": This number represents only the total purchases during the year and ignores the beginning balance and the ending balance. It does not reflect the actual supplies used, so this option is incorrect.
- "$1,000": This equals the ending supplies balance, not the expense. Using only the ending amount ignores the starting balance and purchases, leading to an incorrect expense figure.

In summary, the proper expense recognition follows the continuity of supplies across the period, combining prior stock with acquisitions and subtracting the remaining on hand. The only option that aligns with that flow is 3,800.

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