Washington Forest Products began operations on January 1, 1996. On December 31, 1996 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 indicates that the company made related cash payments during 1996 as follows. Insurance $29,000 Supplies 27,000 Rent 8,000 REQUIRED:

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, 1996. Hint: Note that Forest Products began operations on January 1, 1996.