Consider the following transactions: 1. The company uses supplies purchased in t
ID: 2445357 • Letter: C
Question
Consider the following transactions: 1. The company uses supplies purchased in the previous period, $1,500. 2. The company pays cash for inventory, $6,000. 3. The company repays a loan to the bank, $10,000 (ignore any interest cost). The amount of accrual-basis expense is _____ while the amount of cash-basis expense is _____.
$1,500; 16,000
$6,000; $16,000
$6,000; 11,500
$1,500; 16,000
$7,500; $17,500
$1,500; $6,000
PLEASE EXPLAIN WHY ANSWER IS 1500; 6000
Consider the following transactions: 1. The company uses supplies purchased in the previous period, $1,500. 2. The company pays cash for inventory, $6,000. 3. The company repays a loan to the bank, $10,000 (ignore any interest cost). The amount of accrual-basis expense is _____ while the amount of cash-basis expense is _____.
Selected Answer: C.$1,500; 16,000
Answers: A.$6,000; $16,000
B.$6,000; 11,500
C.$1,500; 16,000
D.$7,500; $17,500
E.$1,500; $6,000
PLEASE EXPLAIN WHY ANSWER IS 1500; 6000
Explanation / Answer
Company uses supplies purchased in the previous worth $1500. This means this amount of purchase much be there in its Opening Inventory. And the payment must have been paid as no information regarding opening account payable is given in the question. This means this expese was alresy paid so it was accured and paid in the previous year.
6,000 paid in the current year and its a current year expense hence on cash basis the expesne is $6,000