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Supplies expense on balance sheet

supplies expense on balance sheet 11,000 Net Income = 27,500 So Just add 27,500 to Capital account to make it 188,500, and there is your balance sheet. Completing an annual balance sheet, income statement, and statement of cash flows is critical to helping farm businesses understand their financial health. 00 Accum. This means that in order to have a complete list of all your expenses, you must have recorded checks that pay all your expenses. In other words all accounts which are related to balance sheet are balance sheet accounts, whereas other type of accounts i. 2. On December 31, there are $1,100 of supplies on hand. Bal. 4% Adjustment E: Mr. Dec. The quality of balance sheet is determined by its composition. 00 : Salaries Expense : 3,500. A balance sheet is a financial snapshot of an entity, either a business or an individual, at any given date. WILSON TRUCKING COMPANY I--Current assets Cash Accounts receivable Office supplies Total current assets Balance Sheet December 31, 2013 Each adjusting entry usually affects one income statement account (a revenue or expense account) and one balance sheet account (an asset or liability account). Dividends 10. Supplies expense ($1,300 balance - $800 on hand) 500. In more technical terms an expense is the expired value of an asset. 00 3 Supplies 3,000. Utilities Expense 98500 Supplies Expense 80000 Miscellaneous Expense 45500 4260000 4260000 Exhibit 2Unadjusted Trial Balance for NetSolutions Balance Sheet Accounts Income Statement Accounts 1. A prepaid expense is not an expense item as the term implies but rather an asset reported on the balance sheet. f. equipment: 700 - 799 Other Revenues: 750: Interest Income: 800 -899 Expense Accounts - Other: 800 A chart of accounts has sections for the balance sheet (assets, liabilities, equity) and the income and expense report (revenue, expenses, other revenue and expenses, and intercompany and related party accounts). 00 : Service Supplies Expense : 900. An accrued expense is one we have incurred but not yet recorded for some reason. It is dated January 1st of the following year. Dr. The ending balance on the statement of owner's equity is used to report owner's equity on the balance sheet. Remaining expenses (not detailed) 32,900. Account # -- Account Title-- Debit (Dr) or Credit (Cr) 1. Accumulated Depreciation-Equipment. Adj. 00 Study Flashcards On Chart of Accounts - Account Type, Normal Balance at Cram. In this case the company has a $500 balance in its supplies account. Solution of Question 3 • Adjusted Trial Balance as at December 31, 2008 • Account Debit Credit • Supplies SR 700 • Prepaid Insurance 1,900 • Salary Payable SR 800 • Unearned Revenue 750 • Supplies Expenses 950 • Insurance Expenses 900 • Salary Expenses 1,800 • Service Revenue 2,000 • Notes Payable 4,700 • Notes Service Supplies Expense is debited for $900. Prepaid Advertising 6. This is because most supplies are consumed within a 12 month period of purchase during the Generally supplies can remain in the supplies expense account if they are immaterial to the overall operations of the company. A physical count of stores should be taken as of June 30th, each year. Interest Receivable 1,000 Interest Revenue 1,000 To record interest earned but not yet received. The expense should ASSETS Current Assets Cash $ 20,000 Accounts receivable $ 15,000 1 Washer/Dryer Expense [TelePhone ~e. ISalaries Payable I. Supplies. Therefore, one side of every sales and expense entry is in […] Balance sheet accounts are those which are related to assets, liabilities and capital. The balance sheet displays the company’s total assets, and how these assets are financed, through either debt or equity. Thus, the supplies expense should be $763, not $800 as reported on the unadjusted trial balance. Complete with balance sheet examples to get you started, this template is easy to use and customize. 3) After the adjusting entry for Supplies has been posted, Supplies Expense has an up-to-date balance, which is the: a. The value of the asset on your business balance sheet at any one time is called its book value - the original cost minus accumulated depreciation. (e) Journalize and post adjusting entries. 00 $0 Following are the assets and liabilities of the company on August 31, 2019, and the revenues and expenses for the month of August. . 1,100 Supplies . One of the most common deferred expenses is supplies. Supplies Expense will start the next accounting year with a zero balance. Teaching Supplies. Utilities Expense 9. Net income for the period is. 4% Accounts Receivable 15,000 1. The Ending Inventory of $300 appears on the balance sheet (and it serves as the ending inventory for the current 600 - 699 Expense Accounts - Other Operating Expenses: 601: Supplies Expense: 630: Bad debt Expense: 635: Advertising Expense: 640: Salary and wage Expense: 650: Travel Expenses: 660: Equipment lease Expense: 670: Depreciation expense, vehicles: 680: Depreciation expense, factory mfr. Interest of $2,000 was incurred and paid f. 00 Supplies used. Determine the adjusted balance in the company's supplies account on January 31. , expense on the income statement that affects retained earnings). E5-7 (Current Assets Section of the Balance Sheet) Presented below are selected accounts of Yasunari Kawabata Company at December 31, 2014. A balance sheet gives a snapshot of your financials at a particular moment, incorporating every journal entry since your company launched. Accumulated Depreciation, Equipment, is shown as a(n) A) expense on the income statement. 7% Building 800,000 91. Recall the accounting equation we learned above: Assets = Liabilities + Owner's Equity. When dividends are paid, the impact on the balance sheet is a decrease in the company's retained earnings and cash balance. Balance Sheet. a $700 net cash inflow from operating activities on the Year 2 statement of cash flows. Net Income $5,900. This results in expense on the income statement being equal to the amount of supplies used, while the remaining balance of supplies on hand is reported as an asset. The debiting of prepaid expense to record the prepayments for future expenses increases the account balance of the prepaid expense as an asset. A sale increases an asset or decreases a liability, and an expense decreases an asset or increases a liability. Operating Income 9,050. d. Image: CFI’s Financial Analysis Course As far as the IRS is concerned, office supplies are the tangible items you use and regularly replenish to conduct business in your office, including pens, paper, and printer toner. Income Statement Credit C. a $1,600 supplies expense on the Year 2 income statement. By the end of the year, the full $24,000 would show as various expenses on the income statement, and there would be $0 left in the prepaid expense asset account shown in the current asset section of the balance sheet. Similarly, the balance sheet consists of assets, liabilities, and equity. This means ?150 is transferred from the balance sheet (asset) to the income statement (expense). The correct answer is a. Salaries Payable. Expenses are unavoidable events in the business to conduct business operations. 00 31 Income Summary 309 22,633. $6,000 of supplies were consumed. Insurance Expense 5. Determine equity and make more informed business decisions. ) Example 2: Open bills that are entered to buy Fixed Assets such as office Equipment will appear on A/P account on a CBBS. The balance In the asset Supplies at the end of the accounting year will carry over The Balance Sheet 5 Problem 6: Solution Red Mountain Motel Common-Size Balance Sheet December 31, 20X1 ASSETS Current Assets: Cash $ 12,500 1. Il. Supplies is an asset account. . 25) Expense Inventory Adjustment – This is brought in from the balance sheet, making an accrual adjustment for the dif-ference in Accounts Payable/Accrued Expenses and Fertilizer & Supplies from the beginning to the end of the accounting period. 33 ($28,000/12months x 4months) which will be recognized as the Insurance Expense. . Cash $92,000 Retained Earnings Accounts Receivable 450,000 Dividends Inventory 370,000 Sales Estimated Returns Inventory 5,000 Cost Of Goods Sold Office Supplies 10,000 Sales Salaries Expense Prepaid Formula to Calculate Balance Sheet. Elements of Financial Statements (SFAC No. During the current month, he purchased an additional $2,000 of supplies. Let’s take on deferred expenses first. 66124_c01_1-46. 00 Prepaid Insurance Professional Fees Rent Expense Utilities Expense + – Accounts Receivable C. The trial balance shows Supplies $0 & Supplies Expense $1,500. a. Salary Expense Trial Balance A Trial Balance is a summary of all account balances in the general ledger. Any of the boxes can be left blank if they are not relevant. cash) or increase a liability (e. Accounts on the balance sheet, Supplies 7. . For example, suppose a company has a $1,000 debit balance in its supplies account at the end of a month, but a count of supplies on hand finds only $300 of them remaining. e. Over time, when companies resort to the asset of prepaid expenses to cover future expenses, the balance in the account of prepaid expense should decline accordingly. Q 30 20 J. The Balance Sheet is divided into two sections: Assets, and Liabilities and Equities. The main purpose of preparing an adjusted trial balance is to adjust the balances of ledger accounts so that they can provide correct […] Income statement accounts (revenue, expenses) Balance sheet accounts (assets from most liquid to least liquid) Liabilities (short term followed by long term) Owner's equity/owner's drawings/retained earnings Sum of debits and sum of credits Select the option that shows the accounts listed in the correct order on a trial balance worksheet. $20,000 of supplies were purchased with cash b. For The Fiscal Year Ended June 30, 2017, Are Shown Below. The ending balance on the statement of owner's equity is used to report owner's equity on the balance sheet. Accounts payable is expected to be paid off within a year’s time or within one operating cycle (whichever is shorter). 40% of the sales were on credit. $200,000 was borrowed from a bank e. Fee Earned 4. A. Note on Corporate "Stock" Common stock represetent the residicual ownerhsip of a coproation. The Balance Sheet Accounts (Assets, Liabilities, & Equity) are presented first, followed by the Income Statement Accounts (Revenues & Expenses). An accrued expense is one we have incurred but not yet recorded for some reason. BE4-4 Foley Advertising Company’s trial balance at December 31 shows Supplies $8,800 and Supplies Expense $0. Prepaid Rent. Deferred Expenses. Initial Balance Sheet Starting a Company (1) Issues 50,000 shares of $10 par value common stock at par value for cash. At the end of the month, he had $250 of supplies left. Advertising expense. January 26, purchased additional supplies for cash, $9,500; December 31, actual count of supplies, $8,500; PB11. The items which are generally present in all the Balance sheet includes Assets like Cash, inventory, accounts receivable, investments, prepaid expenses, and fixed assets; liabilities like long-term debt, short-term debt, Accounts payable, Allowance for the Doubtful Accounts, accrued and liabilities taxes payable; and the Shareholders’ equity-like Share Profit and loss or income statement consist of revenue and expenses during the year, for example, sales, purchases, expenses, income, etc. The company’s policy is to record all prepaid expenses in a balance sheet account. C. Assets 4. For instance, if the supplies expense has a $1,000 debit, the company must credit supplies for $1,000. Cash expenses for planting 499 acres of winter wheat, which were growing as of the balance sheet date, are shown on line 4, $54,669 (an average cost of $109. Problem 11 - Adjusting entry for Unearned Fees The balance of the Unearned Fees account before adjustment is $7,300. Rent expense 5 2 3 3 Salaries expense 20 5 25 25 Sales supplies 3 2 1 1 Assets include balance sheet items such as cash, accounts receivable and notes receivable, inventory, prepaid expenses, office supplies, machinery, equipment, cars, buildings and real estate. At December 31, 2014 The farm balance sheet is one of three financial statements that provide critical information about a farm business. Using the information from unadjusted trial balance and the information about supplies on hand at June. ” This helps us remember larger expenses at the end-of-the-month reckoning. With a balance sheet template, Excel lets you do more in less time. com makes it easy to get the grade you want! The totals of the Balance Sheet & Owners Equity columns will be equal to revenues minus expenses for the period. 729 Rent Expense. Operating Income 9,050. Assets = Liabilities + Equity). I. Even if some or all of the process is automated through the use of an accounting system or software, understanding how a balance sheet is prepared will enable you to spot potential errors so that they can be resolved Expenses are resources used up. 00 Rent Expense 520 3,500. The balance sheet, lists the company’s assets, liabilities, and equity (including dollar amounts) as of a specific moment in time. Depreciation Expense, I. The balance sheet format helps the user by grouping these accounts into classes such as the function of the account, the business use of the resources, and whether resources and liabilities are short-term or long-term. Insurance Expense 200. It proves that the accounting equation (Assets = Liabilities + Owner's Equity) is in balance. 30, the Supplies account will fall while Supplies Expense will rise by $4,700 ($5,000 Unadjusted TB – $300 on hand). Balance Sheet Debit D. debit supplies $800, credit Supplies Expense $800. value of supplies used during the fiscal period c. Deferred expenses are prepaid insurance premiums, prepaid office supplies, prepaid rentals, and prepaid payroll expense, just to name the more popular examples. Here is a balance sheet shown in the vertical format: Supplies Expense 517 1,000. Office Supplies Consumed are categorized as an expense. Accumulated Depreciation X Depreciation Expense X Common Stock X Dividends X Service Revenue X Supplies X Accounts Payable X The ledger of Swann Company contains the following balances: Retained Earnings $30,000; Dividends $2,000; Service Revenue $50,000; Salaries Expense $27,000; and The balance sheet is one of the three main financial statements, along with the income statement and cash flow statement. 00 Prepaid Insurance $8. About Supply Expenses. BALANCE SHEET ACCOUNTS ASSETS CURRENT ASSETS CASH Supplies 155 Office Supplies Inventory 512 Income and Expense Summary Balance Sheet Analysis. General and Administrative Expenses (G&A) Office supplies Ernst Consulting Balance Sheet October 31 Assets Liabilities Cash $11,360 Owner withdrawals $2,000 Accounts receivable 14,000 Consulting fees earned 14,000 Office supplies 3,250 Rent expense 3,550 Land 46,000 Salaries expense 7,000 Office equipment 18,000 Telephone expense 760 Accounts payable 8,500 Miscellaneous expenses 580 When an accountant records a sale or expense entry using double-entry accounting, he or she sees the interconnections between the income statement and balance sheet. Some of the supplies have been used; therefore, an adjustment is necessary for the supplies used before the amount for the balance sheet is determined. $763 of supplies were used up in January. The Prepaid Insurance account will be corrected by the amount of the 4- month period of $9,333. So on the Balance Sheet, you’d show it as a liability because the money won’t actually be paid until the next period. Balance Sheet Considerations Cover crop information may be included on the balance sheet in one of two ways – either as a Prepaid Expense or as a Growing Crop. 00 Supplies Expense Automobile + – + 42,076. Businesses must create balance sheets to analyze the fi The unadjusted trial balance at September 30 shows that the unadjusted balances ar e$630 for Supplies and $0 for Supplies Expense. Prepare an adjusted trial balance. Supplies before adjustments normally represents the cost of the supplies at the beginning of the period plus the cost of the supplies purchased during the period. The financial strength of a company is represented by it balance sheet. . Income. 7,000 Repairs expense—Trucks. In a vertical analysis of an income statement, each item is stated as a percent of total expenses. Examples are sales salaries & wages, fringe benefits, advertising, travel, entertainment, catalogues, rent, utilities, telephone, commissions, warehousing, shipping, depreciation, office supplies, postage, etc. 00 Jason Taylor, Capital 301 22,633. The supplies expense for the period will be $7,000 ($500 beginning balance + $8,000 in supplies purchased – $1,500 remaining) and the adjusting entry will be: Before this adjusting entry was made, the supplies asset account had a balance of $8,500. Balance sheet formula which states that sum of the total liabilities and the owner’s capital is equal to the company’s total assets is one of the most fundamental parts of the accounting on which the whole double entry system of accounting is based. B) $2,000. Let’s take on deferred expenses first. The cost of the office supplies used up during the accounting period should be recorded in the income statement account Supplies Expense. Find the amounts of the noncash items, such as short-term investments, accounts receivable, inventory and supplies, in the "Current Assets" section of a company's balance sheet. At period end adjusting entry. The information in a financial statement comes in two parts: the balance sheet and the income statement. d. Prepaid Insurance. Cash. A balance sheet is a snapshot of a business's financial condition at a specific moment in time, usually at the close of an accounting period. 00 : Totals $ 46,570. qxd 20 10/28/04 12:28 PM Page 20 An income statement or profit and loss account (also referred to as a profit and loss statement (P&L), statement of profit or loss, revenue statement, statement of financial performance, earnings statement, statement of earnings, operating statement, or statement of operations) is one of the financial statements of a company and shows the company's revenues and expenses during a particular period. When my husband and I need to get more specific about an expense, we just scribble a key word next to the cost like “school donation” or “new glasses. Office expenses, on the other hand, are items and services you use for your business that don’t fall into more specific deduction categories. Wages and salaries that are for the period but won’t be paid out until the following period are both an expense and liability. income statement or otherwise called P&L (profit and loss) accounts are accounts related to expense and revenue items. Net income for the period is. 14 FastForward pays $120 cash for supplies. (d) Trial balance $30,750 Preparation of adjusted trial balance is the fifth step of accounting cycle. Quickly memorize the terms, phrases and much more. On the income statement, list expenses in decreasing order by amount ---- that is, the largest expense first, the smallest expense last. What value of supplies balance should be reported on the balance sheet? You should not report the supplies balance before the accounts have been adjusted. _____ Service Revenue g. value of supplies bought during the fiscal period The balance sheet approach determines an expatriate’s salary based on the going rate for the same — or a similar — position in their home country. . These supplies include such items as paper, toner cartridges, and writing instruments. . This trial balance is prepared after taking into account all the adjusting entries prepared in 4th step of the accounting cycle. Q. At the end of an accounting period, the consumable supplies on hand are counted and amount used is recorded as an expense in the income statement using an adjusting entry In addition to affecting retained earnings or the owner's capital account, an expense will also cause one or more of the following changes to the balance sheet: A decrease in Cash, Prepaid Expenses, Supplies on Hand, Inventory An increase in the credit balance in the contra-asset account Allowance for Doubtful Accounts or Accumulated Depreciation Write supplies on the line directly underneath the supplies expense entry. Balance Sheet Items Classifications. c. D) $2,550. ___ Accounts Receivable b. 00 : Utilities Expense : 1,800. Income Statement. Here are the steps you can follow to create a basic balance sheet for your organization. They are normally shown just below inventories. $12,100 D. The balance sheet will form the building blocks for the whole double entry accounting system. Recall that the balance sheet is a formal presentation of the accounting equation. Since supplies are supposedly used up within the year of purchase, the cost of supplies as current assets is listed as an expense on your business income statement (P&L) and taken as a deduction on your business taxes in the year they are purchased. Russo, Drawing A. which is reported in the stockholders’ equity section of the balance sheet The company’s policy is to record fees collected in advance in a balance sheet account. In addition, Supplies Expense shows a balance of $1,500, which equals the cost of supplies used in October. Wilson, Wltlldrawals Trucking fees earned Depreciation expense-Trucks Salaries expense Office supplies expense Repairs expense-Trucks Totals Debit Credit s 7,600 16,500 2,000 158,000 75,000 19,000 20,993 Current Asset Balance Sheet Debit: Supplies Expense: Operating Expense Income Statement Debit: Unearned Service Revenue: Current Liability Balance Sheet Credit: The Balance Sheet will show $8,670 of supplies remaining! After the adjustment, the Supplies account will show the correct balance of $8,670 on the Balance sheet and the Insurance Expense account will report the correct amount of expired insurance of $1,050, on the Income Statement. IAccumulatedI Depreciation, Laundry Equipment. 00 Depreciation of equipment. the following are the accounts and the normal balances of Healthy Body Center on its 4th yr of operation ending December 31, 2008. Remember, the unadjusted trial balance did not include interest revenue, supplies expense, additional wages expense, insurance expense, or income taxes expense. The balance sheet formula is the accounting equation and it is the fundamental and most basic part of the accounting. Paradise Travel Service Balance Sheet. An expense report provides an accurate record of business costs, which is important for budget planning and tax reporting. a. Balance sheet formula which states that sum of the total liabilities and the owner’s capital is equal to the company’s total assets is one of the most fundamental parts of the accounting on which the whole double entry system of accounting is based. AP is considered one of the most current forms of the current liabilities on the balance sheet In simple words, supplies are assets until they are used. g. debit supplies Expense $700, credit Repair and Maintenance Expense, Vehicle: 7550: Supplies Expense, Office: 7600: Telephone Expense: 7620: Training Expense: 7650: Travel Expense: 7700: Salaries Expense, Officers: 7750: Wages Expense: 7800: Utilities Expense: 8900: Other Expense: 9000: Gain/Loss on Sale of Assets Wages Expense: 38,200 − Supplies Expense: 18,480 − Rent Expense: 12,000 − Miscellaneous Expense: 3,470 − Electricity Expense: 2,470 − Telephone Expense: 1,494 − Depreciation Expense: 1,100 − Interest Expense: 150 − Dividend: 5,000 − Total: $217,014: $217,014 Empower your business finances with balance sheets that show year-to-year comparisons, increase or decrease in net worth, assets and liabilities, and more. The rule for asset accounts says they must increase with a debit entry and decrease with a credit entry. Investors, creditors, and internal management use the balance sheet to evaluate how the company is growing, financing its operations, and distributing to its owners. 2. 5. The amount of supply expense to be recorded for the month is: A) $1,750. One of the most common deferred expenses is supplies. – Specific items of the balance sheet – Detailed revenue categories – Sales units – Number of customers • Alternative or Supplement: – Do comparison on expense ratios • Expenses per unit of revenue • Expenses per average customer • Expenses per unit of output BALANCE SHEET CALCULATOR. B. If this adjusting entry is not made, the income statement will show higher income and the balance sheet will show supplies asset that actually does not exist. Fees Earned 17,400. Your small business's balance sheet provides a snapshot of your assets and liabilities at a given point in time. If $700 of supplies are on hand at the end of the year, the supplies expense to be reported on the income statement for the year would be: $975 The following balance sheets (combined on one page) have been prepared given the first set of assumptions. On a worksheet, the adjusted balance of the Supplies Expense account is extended to the _____column. Supplies on hand are shown on the balance sheet of the business as a current asset as they are expected to be used within one year. $12,100. This account is also to include pharmaceutical and dietary food as would be unique to a hospital and clinic operation. 0 Cash And Financial Assets Dr The $5,020 retained earnings balance is more reasonable than the $6,400 because the $6,400 did not take into consideration all the company's December revenues and expenses. _____ Utilities Expense h. Utilities expense. The supplies account has a balance of $975 at the beginning of the year and was Debited during the year for $2,700, representing the total of supplies purchased during the year. Supplies Expense 3,800. A balance sheet comprises assets, liabilities, and for the month ended December 31, 2016, and the classified balance sheet on that date. Supplies Expense ($1,600 – $500) 1,100 Supplies 1,100 EXERCISE 3-7 (15–20 minutes) (a) Ending balance of supplies $700 Add: Adjusting entry 950 Deduct: Purchases 850 Beginning balance of supplies 800 Salaries expense 50,000 Insurance expense 0 Rent expense 33,000 Teaching supplies expense 0 Advertising expense 6,000 Utilities expense 6,400 Totals $317,400 $317,400 1. Supplies 900. The balance sheet consists of two main sections: first, assets (usually presented on the left) and second, liabilities and shareholders' equity (usually presented on the right). Service Supplies is credited for $900. B) liability on the balance sheet. 1,100 EXERCISE 3-7 (15–20 minutes) (a) Ending balanceof supplies $700 Add: Adjusting entry 950 Deduct: Purchases 850 Beginningbalanceof supplies $800 (b) Totalprepaidinsurance $4,800 ($400 X 12) Amount used (6 X $400) 2,400 Presentbalance $2,400 The policy was purchased six months ago (August 1, 2013) (c) The entry in January to record salary and wages expense was Salaries and Wages Expense . Supplies Expense should subsequently be debited and Supplies credited for the amount used. Usually companies prepare an official balance sheet quarterly ( the last day of March, June, September and December, for example) and at the end of their fiscal year (such as December 31) but it can be done at any time. 1. 2. Indentify each as (a) asset,(b) liability, (c) revenue, or (d) expense 1. $17,400 Below are all expenses or losses, including accounts payable accounts. Determine equity and make more informed business decisions. 5. 3Prepare journal entries to record the following transactions. Earnings per share ($5,900 ÷ 3,000 shares) $1. There are two types of supplies that may be charged to expense, which are: Factory supplies. As a result, the balance Supplies Expense is an expense account, increasing (debit) for ?150, and Supplies is an asset account, decreasing (credit) for ?150. Supplies 7. (The Source account is A/R and the target account is Inventory Asset and both are balance sheet accounts. If it is in one column, assets are listed first, followed by liabilities and net worth. A janitor is paid to clean floors. in simple words; it shows the operating efficiency/performance of an entity during the year. Depreciation - Equipment $4. e. Deferred Expenses. Enter the relevant values for your Assets and Liabilities. Balance sheet Shaded cells have feedback. The cost of office supplies on hand at the end of an accounting period should be the balance in a current asset account such as Supplies or Supplies on Hand. Supplies Expense ($1,600 – $500) . The balance sheet is a picture of the company at a specific moment in time. C) $250. Cram. If you ever apply for a small business loan or line of credit, you may be asked to provide your income statement. As the supplies are used up, the amount used is transferred from the asset account to It should affect two accounts and two statements. Post the balance from the unadjusted trial balance and the adjusting entries to the T-accounts. This is an Teaching supplies expense 0 (dr) Advertising expense 6,000 (dr) Utilities expense 6,400 (dr) total debit = 317,400. Dec 31 Depreciation expense—Equipment 13,200 For example, a sale recorded on an income statement will increase an asset (such as cash or accounts receivables) on the balance sheet, and an expense decreases an asset (e. e. Insurance Expense 2,800 Prepaid Insurance* 2,800 To record insurance coverage expired ($4,000 - $1,200). The balance sheet is created to show the assets, liabilities, and equity of a company on a specific day of the year. An accrued expense is one we have incurred but not yet recorded for some reason. Use the following subtotals: Gross Profit, Total Operating Expenses, Income from Operations, Income before Income Taxes, and Net Income, and show EPS. Salaries do not appear directly on a balance sheet, because the balance sheet only covers the current assets, liabilities and owners equity of the company. counts the supplies on hand, it can record the used-up supplies as expenses. A deferred expense is something paid for but not used up (expensed) yet. Accounts Receivable. Unearned Training Fees. Russo, Drawing + Accounts Receivable + – Cash Dr. Depreciation expense (100) Sales and general expense (100) Interest expense (50) Income tax expense (40) Net income $60 Balance Sheets at December 31, 19X1 and 19X2 19X1 19X2 Assets Cash $50 $60 Accounts receivable 500 520 Inventory 750 770 Current assets $1,300 $1,350 Fixed assets (net) 500 550 Total assets $1,800 $1,900 Liabilities and equity Similarly, it is prepared before the balance sheet, since the amount of owner’s equity at the end of the period must be reported on the balance sheet. . The stock of Office Supplies at the end of the year is categorized as assets. The Vertical Balance Sheet Format . (continued) South Bend Repair Service CO. Balance Sheet Insurance Expense ($12,000 X 1/12) 1,000 Prepaid Insurance 1,000 5. If supplies are more significant in value to the company, then an adjustment can be made by debiting supplies on hand, an asset account, and crediting supplies expense for the amount still on hand at the end of the The supplies on hand means that the supplies have been used during the current accounting Period. 55 per acre). (b) Supplies Expense $5. It reflects various aspects of the health and strength of a business by listing its assets, liabilities and net worth (also referred to as equity). : Accumulated Depreciation $ 25,000 Fees Earned 85,000 Depreciation Expense 9,500 Rent Expense 44,000 Prepaid Insurance 7,000 Supplies 500 Supplies Expense 2,500 Prepare an income statement. Less: Depreciation Expense 1,300 Income Statement Balance Sheet Account Dr. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify: 20 points Debit Credit 4 11 59 $ 14 6 Account Titles Cash Accounts Receivable Supplies Land Equipment Accumulated Depreciation Software Accumulated Amortization Accounts Payable Notes Payable (short-term) Salaries and Wages Payable Operating expenses include office rent, business insurance, office supplies, salary and benefits for employees, and more. Let’s take on deferred expenses first. $8,900. Statement of Stockholders' Equity Annual Report Project Resources. At the bottom, you’ll find your net income: revenues minus expenses. To gain as much insight from your balance sheet as possible, it's important to understand the various types of assets shown there. If one of the businesses is a lot more productive, that can be a sign to look more closely. This information is provided in order to communicate the financial position of the entity to interested parties. Let’s look at how to read a balance sheet. Unearned Rent Supplies expense ($1,300 balance - $800 on hand) 500. Rent Expense : 1,500. For example, if your small business obtains equipment with an operating lease that requires $1,000 monthly payments, you would report a $12,000 lease expense on your annual income statement. C. The picture is painted by When analyzing the balance sheets of companies in a particular sector or industry, be sure to compare the relative property, plant, and equipment of the firms to a dollar of after-tax profit generated. The Financial Accounting Standards Board (FASB) introduced a new accounting standard (ASU 2016-02) that requires companies to recognize operating lease assets and liabilities on the balance sheet. A balance sheet is a snapshot of the financial condition of a business at a specific moment in time, usually at the close of an accounting period. These supplies include maintenance materials, janitorial supplies, and items that are considered Office supplies. 97 AP4–7. B. 1,800 Salaries and Wages Payable All balance sheets follow the same format: If it is in two columns, assets are on the left, liabilities are on the right, and net worth is beneath liabilities. The balance sheet format summarizes the balance sheet accounts into assets, liabilities and owners’ equity. Examples of Liability Accounts The normal balance for the supplies expense account is a debit balance. Balance Sheet: Examples Balance Sheet. Question: Use The Above Adjusted Trial Balance To Prepare Wilson Trucking Company’s Classified Balance Sheet As Of December 31, 2017. Notice how the heading of the balance sheet differs from the headings on the income statement and statement of Unearned Service Revenue Current Liability Balance Sheet Credit Utilities Expense Operating Expense Income Statement Debit (1) The normal balance for Income Summary will be credit when there is a net income, debit when there is a net loss. One of the most common deferred expenses is supplies. Supplies 900. Statement of Cash Flows. Balance sheet. Expenses 15 Prepaid Insurance 51 Wages Expense 17 Land 52 How to Prepare a Basic Balance Sheet. Your current liabilities might include $1,000 in accounts payable for more ice cream and supplies, $500 for sales tax, and $1,500 owed in salary and wages to your employees. Supplies on hand are balance sheet assets that become income statement expenses as employees requisition and remove them from the storage locker for use. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for June 30, 2005 for Brodie Co. $100,000 of equipment was purchased by issuing a note payable. dr Supplies Expenses (+E, -SE)cr Supplies (-A)So, supplies expense is on your income statement but is also reflected on your balance sheet because When an item is actually used in the business it becomes a supplies expense. Cr. Examples of Balance Sheet Formula (With Excel Template) Balance Sheet Formula Calculator; Balance Sheet Formula. . This calculator is designed as a quick ready reckoner for Balance Sheet calculations. ___ Equipment d. Cash Unadj. Accounts Payable. Bowser Incorporated Balance sheet financial statement would use the format of the accounting equation, which would include asset, liability, and equity. Examples of Asset Accounts. Then you debit the income supplies: daycare supplies @ 100% daycare supplies - shared household supplies @ 100% household supplies - shared activity days crafts and arts educational supplies & curriculum first aid supplies photo or video supplies & processing other: other expenses - please list and/or explain bank charges cell phone field trips The right side of your balance sheet shows your liabilities. Write the same amount in the credit column that appears in the debit column for supplies expense. Expense-Equip. Dec. 00 $ 46,570. Create a T-account for Supplies, post any entries that affect the account, and tally ending balance for the account (assume Supplies beginning balance of $6,550). IAdvertising Expense. Each month, the firm would deduct $2,000 from its prepaid expenses on the balance sheet, transferring the amount to a monthly rent expense line on the income statement. Income tax expense 3,150. Question: Single-step Income Statement And Balance Sheet Selected Accounts And Related Amounts For Kanpur Co. This is true for all of the accounts on the income statement (recall, this statement is a record of what happened during a period of time) as well as the dividend account. Prepaid Insurance 4,800. Office supplies expense 800 Office equipment 15,000 Balance Sheet Dr. Coverage begins on December 1. Accounts Payable- 16,000 Accounts Receivable- 24,000 Accumulated Depreciation-gym equipment- 1,080,000 Accumulated Depreciation-furniture and fixtures- 58,000 Advertising Office supplies, fuel, building supplies, and other materials not yet charged as expense but carried in stock in general storerooms for future issue. So you close the account with an equal credit balance to zero out the supplies expense account. After incorporating the $900 credit adjustment, the balance will now be $600 (debit). Each year the equity account changes with the ebb and flow of revenues and expenses -- creating a link between the income statement and balance sheet. Depreaciation expense- equipment. Expense Revenue Date: Month, Year to Month, Year Office Expenses Food and Supplies Payroll Taxes Permits and Licenses Balance Sheet $0. What Is a Balance Sheet? Knowing what a balance sheet is crucial. b. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet: Accumulated Depreciation $3,200. com. Vertical analysis may be prepared for several periods to analyze changes in relationships over time. c. g. Remaining expenses (not detailed) 32,900. 11 Depreciation Expense 12 Interest Revenue 13 Salaries Expense 14 Ellis from ACT 201 at BRAC University Additionally, most supplies in a balance sheet are not accounted for in a subcategory or classification. Here we're going to discuss the Balance Sheet Portion of the Chart Of Accounts and how it's organized. The normal balance side of JENNIE EWERT, DRAWING: Debit: The normal balance side of SALES: Credit: The normal balance side of ADVERTISING EXPENSE: Debit: The normal balance side of UTILITIES EXPENSE: Debit: The normal balance side of MISCELLANEOUS EXPENSE: Debit: The normal balance side of REPAIRS EXPENSE: Debit: The increase side of CASH 65) Hank's Tax Planning Service has a beginning balance in the supplies account of $800. Since $763 of supplies were used up, the supplies expense is $763. Cash $ 11,200- Notes Payable $60,000 -Accounts Receivable 14,400- Rent Expense 2,400 - Equipment 128,000- Repair Expense 800- Lesson Revenue 15,000 -Fuel . 523 367. Professional Library Balance sheet. Hence, there is no impact on the income statement as the expense has not incurred yet. At December 31, 2011 4. Prepare the current assets section of the balance sheet, listing the accounts in proper sequence. Accounting Adjusting Entries on the Real Samples. Supplies Expense equals the supplies consumed (used) to generate revenue. Organizations will typically allocate additional allowances or reimbursements as appropriate, which ensures employees can maintain their usual standard of living once they relocate. (f) Prepare an adjusted trial balance. Earnings per share ($5,900 ÷ 3,000 shares) $1. Look at our Balance Sheet below. The balance sheet shows the balance, at a particular time, of each asset, each liability, and owner's equity. Deferred Expenses. 6) Balance Sheet provides information about financial position of a company. Green discovers that he used $25 worth of office supplies during April. Equipment. d. The accounts that are reported on the Balance Sheet are shaded: assets, liabilities, and equity. There are no depreciation or interest expenses with an operating lease, and a business does not report the equipment on the balance sheet. You need a balance sheet to specifically know what your company's net worth is on any given date. xlsx - Income Statement Revenues Service Revenue $ 10,600 Expenses Salaries and wage expence Rent Expense $ $ $ $ $ $ 5,200 900 1,500 40 The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. 97 AP4–7. 00 : Taxes and Licenses : 370. Bal. Unearned Rent 8. The normal balance of an asset account is debit. Prepaid Insurance 6. 00 C. List expenses in decreasing order by amount ---- that is, the william gonzales, a retired army officer, opened a body building center, on january 1,2005. The business would then record the supplies used during the accounting period on the income statement as Supplies Expense. Begin by preparing the income statement. The balance sheet is based on the fundamental equation: Assets = Liabilities + Equity. The balance sheet formula can be expressed like this: Assets = Liability + Owner’s Equity (Accounting Equation) Balance sheet transactions explained using simple examples. debit supplies $700, credit Supplies Expense $700. Total expenses 38,950. Cr. The statement summarizes a company's revenues and business expenses to provide the big picture of the financial performance of a company over time. (e) 10 20 (e) 10 - Balance sheet - Statement of cash flows Indicate in the space provided by each item whether it would appear on the income statement (IS), balance sheet (BS), or retained earnings statement (RE): a. Statement of cost of goods manufactured. Because of this, the statement of owner’s equity is often viewed as the connecting link between the income statement and balance sheet. total credit = 317,400-----GENERAL JORNAL. Let’s take on deferred expenses first. Include income tax expense, assuming a 25 percent tax rate. Every time a company records a sale or an expense for bookkeeping purposes, both the balance sheet and the income statement are affected by the transaction. Balance Sheet. He therefore makes a $25 adjusting entry to increase (debit) supplies expense and to decrease (credit) supplies. same as the ending balance for Supplies d. Other key balance sheet items such as fixed assets and share capital have been arbitrarily determined for the time being, taking care, of course to make sure that the balance sheet stays balanced (i. Empower your business finances with balance sheets that show year-to-year comparisons, increase or decrease in net worth, assets and liabilities, and more. A deferred expense is something paid for but not used up (expensed) yet. The balance in Supplies Expense will increase during the year as the account is Debited. Journalize the adjusting entry required if the amount of supplies on hand at the end of the year is $260. This printable chart has enough categories to encompass most any expense, yet not too many to make it overwhelming. . Accumulated Depreciation-Bldg 12. The Greener Landscape Group d. The income statement is typically used in combination with a balance sheet statement. (continued) South Bend Repair Service CO. 00 : Depreciation Expense : 720. The balance sheet lists the asset, liability, and owner's equity balances at a specific time. Each account and its balance (debit or credit) is listed on the trial balance. Now that you can answer the question what is a balance sheet. This is an The last two steps in the accounting process are preparing a trial balance and then preparing the balance sheet and income statement. Formula to Calculate Balance Sheet. Salaries Expense. Insurance expense. It proves that the accounting equation (Assets = Liabilities + Owner's Equity) is in balance. (Source account is A/P and the account is Fixed Asset and both are balance sheet accounts. When the Debit column of the Income statement columns is greater tJian tJie Credit column, the company will be reporting a net income. Office Supplies Expense 4,992 Office Supplies** 4,992 To record office supplies used ($240 + $5,239 - $487). Indicate whether each account would flow into the income statement, statement of owner’s equity, or balance sheet. If $800 of supplies are on hand at the end of the period the adjusting entry is: a. Supplies Expense 3,800. Insurance Expense 200. (2) Acquires land and building costing $225,000 with the payment of $50,000 cash and the assumption of a 20-year, 8-percent mortgage for the balance. A balance sheet gives a statement of a business’s assets, liabilities and shareholders equity at a specific point in time. The merchandise cost Popovich $28,000. An accrued expense is one we have incurred but not yet recorded for some reason. 00 Points: 21 / 21. A prepaid expense is an asset on a balance sheet that results from a business making advanced payments for goods or services to be received in the future. You can find our sample balance sheet at the end of the article. The Service Supplies account had a debit balance of $1,500. If, on the other hand, your business uses a large amount of consumable items and you keep a supply of them on-hand, your company's income statement will report an office supplies expense that At the end of the accounting period, the total cost of supplies used during the period becomes an expense and an adjusting entry is made for it. ___ Common Stock c. 00 $0. The accounting process for supplies: Consumable Supplies Expense Recorded When a business purchases consumable supplies such as stationary, it records these as supplies on hand in the balance sheet of the business. Required: Prepare an income statement, statement of changes in equity and a balance sheet as at June 30, 2016. 1. Balance Sheet Definition: A financial statement that lists the assets, liabilities and equity of a company at a specific point in time and is used to calculate the net worth of a business. Wages Payable EX 4-2 Classifying accounts Balances for each of the following accounts appear in an adjusted trial balance. It can also be referred to as a statement of net worth, or a statement of financial position. ) Balance sheets function like a snapshot of the financial state of the company at a given point in time. Cash $ 5,900 Accounts Receivable 27,500 Office Supplies 7,590 Trucks 196,000 Accumulated Depreciation—Trucks $ 40,376 Land 48,000 Accounts Payable 9,900 Interest Payable 7,000 Long-term Notes Payable 63,000 Common Stock 15,000 Office supplies expense 2,000 Repairs expense-Trucks 9,890 Totals $359,269 $359,269 Use the above adjusted trial balance to prepare Wilson Trucking Company's classified balance sheet as of December 31, 2013. The easiest method for determining if an expense should be classified as a deferred expense is simply to determine "when" the business intends to make use of the expense. Here is a sample balance sheet for the Doodads Company. Fees Earned 17,400. Prepaid Expense 4,800. 26) Accrued Operating Expenses – Adds lines 7 and 9-25 above. 13 FastForward pays $2,400 cash (insurance premium) for a 24-month insurance policy. Deferred Expenses. A balance sheet is comprised of their assets (items of financial value), their liabilities (items that reflect a debt owed) and stockholder’s or owners’ equity (book value of the company). Office supplies Trucks Accumulated depreciation- Trucks Land Accounts payable Interest payable Long-term notes payable K. That specific moment is the close of business on the date of the balance sheet. The Withdrawal's account balance w111 be used to prepare tJie balance sheet goods sold expense account into the next cycle. e. Create a T-account for Unearned Revenue, post any entries that affect the account, tally ending balance for the account (assume Unearned Revenue A deferred expense is something paid for but not used up (expensed) yet. When they are used, they become an expense. 60,000 Office supplies expense. Balance sheet formula is the most basic part of the Textbook solution for Accounting (Text Only) 26th Edition Carl Warren Chapter 1 Problem 1. (c ) Insurance Expense $8. (d) Depreciation Expense $4. Accounts Recievable. This means that its recorded value on the balance sheet is adjusted downward to reflect that its overvalued compared to the market value. . We have step-by-step solutions for your textbooks written by Bartleby experts! Likewise, the $5,000 is recorded as a prepaid expense in the current asset of the balance sheet. Supplies expense of $900 is the adjusting entry and the corresponding debit is to Retained Earnings (i. Supplies on Hand Purchases While income and expense accounts are found on your income statement, the balance sheet provides a summary of your business’ asset, liability, and equity accounts, providing the foundation for Supplies can be considered a current asset if their dollar value is significant. Doodads Co. Balance Sheet. LaundJ:y Equ:i,pment. Your long-term liabilities might include $4,000 outstanding for a business loan you took to start the company. same as the beginning balance for Supplies b. $3,200. Depreciation Expense 1,300. Rather, we want that account to start fresh from a zero balance. Factory Supplies Expense, Depreciation Expense-Factory, and Heat, Light, and Power-Factory are all factory overhead cost which is a Supplies expense Supplies Depreciation, building Expired cost of a building Technically, the asset outflow associated with salaries is not cash. Total expenses 38,950. Supplies Expense The balance sheet reveals the assets, liabilities, and equity of a company. If the cost is significant, small businesses can record the amount of unused supplies on their balance sheet in the asset account under Supplies. I. 7% Cleaning Supplies 2,500 0. With a balance sheet template, Excel lets you do more in less time. Green must record the expiration of one twelfth of his company's insurance policy. They offer a snapshot of what your business owns and what it owes as well as the amount invested by its owners, reported on a single day. The balance sheet thus provides a snapshot of a business at an exact point in time - it shows the balances of the various accounts on the last day of the reporting period. Notes receivable due in 390 days appear on the balance sheet in the current assets section; balance sheet in the noncurrent assets section; balance sheet in the current liabilities section As of December 31, 2013, a supplies inventory shows $800 of supplies available. l Balance Statement 117 5 50. For example, assume the company's balance sheet shows $50,000 in short-term investments, $60,000 in accounts receivable, $10,000 in inventory and $5,000 in supplies. 00 $0. Payments are made to workers and other employees because they create something of value. A. As a result, the balance sheet size is reduced. Adjustment F: Mr. The Balance Sheet. Income Statement Debit B. Book value may (but not necessarily) be related to the price of the asset if you sell it, depending on whether the asset has residual value. 16EX. Score: 95/ May 31, 2018 1 Assets 2 Cash $52,000. Wages Expense 10. The balance sheet provides a snapshot of the financial condition of the company on a specific day (usually December 31), whereas the income statement reports the amount of revenue a company earned over a specific time period (usually for a year). The most common reports are printed or reviewed monthly, quarterly and yearly. (Hint: For the balance sheet, also include a subtotal for each asset's book value). Balance Sheet as of Dec 31, 200X A deferred expense is something paid for but not used up (expensed) yet. Equipment 3. Balance Sheet. Laundry Supplies Expense. 2. a $600 balance in the accounts payable account on the Year 2 balance sheet. The "balance" comes from reporting assets and then balancing those assets with the liabilities and equity used to purchase them. This approach […] Choose the date for the balance sheet. If you want to, you can record expenses when you write checks. Eddy Rosewood, Drawing. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet: Accumulated Depreciation $ 3,200. Accounts Payable (AP) is generated when a company purchases goods or services from its suppliers on credit. Within QuickBooks 2012, you have the option of either working with or without an accounts payable account. Christy Russo Trial Balance September 30, 20– DEBIT 1,730. 4% Property and Equipment: Land 120,000 13. Accounts Payable. • Prepaid Expense and Supplies - Accumulate expenses related to planting cover crops for soil nutrient enhancement using the Cover Crop Expense category. Salaries expense. 3% Total Current Assets 30,000 3. Fees Earned. At the end of the period, after the company ABC Ltd. A balance sheet comprises assets, liabilities, and owners’ or balance sheet in the property, plant, and equipment section; balance sheet in the long-term liabilities section; income statement as an operating expense . 0 Assets Dr. A comparable investment in growing crops is expected at the same point in time next year; hence, no change is expected in the cash investment in growing crops at year end. 00 Depr. For a period of time, expenses reduce the assets and increase the liabilities. Wilson, Capital K. Click once in each of the "Total" boxes to calculate a result for that section. Revenue 11 Cash 41 Fees Earned 12 Accounts Receivable 42 Rent Revenue 14 Supplies 5. A balance sheet tells you a business’s worth at a given time, so you can better understand its financial position. 00 For example, you can use an expense report to track mileage and gas used on the job, meetings with clients that include meals or other entertainment, or even office supplies purchased by an employee. Adjustments (f) 30 (a) 10 M. One of the most common deferred expenses is supplies. Supplies 5. Income tax expense 3,150. Classified balance sheet at the end of the reporting year, March 31, 2013. In examining a balance sheet, always be mindful that all components listed in a balance sheet are not necessarily at fair value. Net Income $5,900. Common stock is reported on both the balance sheet and the income statement. Since the annual premium is $1,200, he Selling Expenses are expenses incurred and related to making sales. Dec 31 Teaching supplies expense 5,200 Teaching supplies 5,200. Cr. The balance sheet provides a picture of your farm’s financial position on a specified date. Cash. Prepare the adjusting journal entry to correctly report the balance of the Supplies account and the Supplies Expense account as of December 31, 2013. (d) Prepare a trial balance at September 30. Salaries expense. debit supplies Expense $800, credit Supplies $800. Supplies Expense, No. To calculate Supplies Expense, add together the beginning supplies and the supplies purchased, then subtract the supplies left at the end of the period. Balance Sheet Credit $130 is the amount used for personal expenses; Effect on balance sheet: $3,470 is the amount left in the business bank account at the end of the day; $130 is placed against the drawings account on the balance sheet which decreases the owner's equity. 0. 00 Insurance premiums expired. Insurance Expense 11. Wages payable is a liability The Chart of Accounts is normally arranged or grouped by the Major Types of Accounts. (Hint: For the balance sheet, also include a subtotal for each asset's book value). How to Forecast a Balance Sheet Forecasting your business’s balance sheet involves estimating your company’s assets and liabilities for a future date. 00 Supplies $5. C) deduction from net income on the statement of owner's equity. Dec 31 Insurance expense 2,400 Prepaid insurance 2,400. When supplies are purchased, the amount is placed on the balance sheet in an asset account called 'Supplies'. . 00 $0. The balance sheet debit column of the work sheet for Kren Ltd includes the following accounts: Accounts Receivable $12,500; Prepaid Insurance $3,600; Cash $18,820; Supplies $5,300, and Short-term Investments $6,700. _____ Cash i. At the end of September 2005, by counting the bottles of shampoo and tubes of gell on hand, your salon manager determined that $00 of supplies were left. (g) Prepare an income statement and an owner’s equity statement for September and a balance sheet at September 30. This is the amount you have left after you’ve paid all debts. 726 Salaries and Wages Expense, and No. Complete with balance sheet examples to get you started, this template is easy to use and customize. Fees Earned $17,400 . Total of all debit The balance of the Supplies account before adjustment at the end of the year, is $2,730. debt). LO 4. b. Trip. By using this later approach, the supplies will appear on your balance sheet as a current asset, until you use them and charge them to expense with this entry: Thus, consuming supplies converts the supplies asset into an expense. Teaching supplies expense. $60,000 of merchandise was sold. Supplies Expense 6,000 Salaries Payable 3,100 Accumulated Depreciation 20,000 Additional Paid in Capital 20,000 Income tax rate 30% Instructions: Prepare an income statement, a statement of retained earnings, and a classified balance sheet for Bowser Incorporated for the year 2009. With a properly prepared balance sheet, you can look at a balance sheet at the end of each accounting period and know if your business has more or less value, if your debts are higher or lower, and if your working capital is higher or lower. In a vertical analysis of a balance sheet, each asset item is stated as a percent of total assets. The following illustrates the purchase of $900 of supplies. (3) Purchases a used crane for $13,200 cash Salary Expense + + – + – Automobile Expense – CREDIT 81,133. Account payable 2. Feedback Check My Work Follow Example Exercise 1-6. INSTRUCTIONS. Depreciation Expense 1,300. By examining a sample balance sheet and income statement, small businesses can better understand the relationship between the two reports. I. Dr. supplies expense on balance sheet