Washington Forest Products began operations on January 1, 2011. On December 31, 2-11, the companys accountant ascertains

Question:

Washington Forest Products began operations on January 1, 2011. On December 31, 2-11, the company’s accountant ascertains that the following amounts should be reported as expenses on the income statement:

Insurance expense                  $20,000

Supplies expense                      11,000

Rent expense                            14,000

A review of the company’s cash disbursements indicated that the company made related cash payments during 2011 as follows:

Insurance                                 $29,000

Supplies                                    27,000

Rent                                         8,000

a. Explain why the amounts shown as expenses do not equal the cash paid.

b. For each expense account, compute the amount that should be in the related balance sheet account as of December 31, 2011.


Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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