Consider the following independent scenarios:a) At January 1, Year 2, accounts receivable was $24,000. Cash collected on accounts receivable during Year 2 was $55,000. At December 31, Year 2, accounts receivable was $30,000. What were the revenues earned on account during Year 2?b) At January 1, Year 2, accounts payable was $19,000. During Year 2, expenses on account were $68,000. At December 31, Year 2, accounts payable was $15,000. What was the amount of cash payments on accounts payable that were made during Year 2?c) At January 1, Year 2, the balance in the prepaid insurance account was $480, which related to insurance coverage that expired on March 1, Year 2. On March 1, Year 2, the company paid $3,000 for insurance coverage for one year of insurance coverage that began on that date.
What was the amount of insurance expense for Year 2?d) At January 1, Year 2, the balance in the supplies account was $550. At December 31, Year 2, the company counted $400 of supplies on hand. The company reported supplies expense in Year 2 of $3,300. What was the total of supplies purchases during Year 2?
What will be an ideal response?
a) $61,000
b) $72,000
c) $2,980
d) $3,150
a) Beginning accounts receivable of $24,000 + Revenues earned on account ? Cash collections on account of $55,000 = Ending accounts receivable of $30,000; Revenues earned on account = $61,000
b) Beginning accounts payable of $19,000 + Expenses incurred on account of $68,000 ? Cash payments made on accounts payable = Ending accounts payable of $15,000; Cash payments made on accounts payable = $72,000
c) Monthly insurance expense beginning March 1 = Payment of $3,000 ÷ 12 months = $250 per month; Year 2 Insurance expense = Insurance expense relating to Jan. and Feb. of $480 + Insurance expense for March through December of $250 per month × 10 months = $480 + $2,500 = $2,980
d) Beginning supplies of $550 + Supplies purchased ? Supplies expense = Ending balance of supplies; $400 + Supplies purchased ? $3,300 = $400; Supplies purchased = $3,150
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