Reference no: EM131263900
Government (US) and NFP Accounting: Recognizing expenditures in Governmental Funds
The following schedule indicates selected amounts from a city's preclosing 2018 and post closing 2017 general fund trial balances: 2018 2017.
Expenditures $315,000 ----------
Supplies Inventory $81,000 $ 54,000
Encumbrances 36,000 -----------
Reserve for Encrumbrances $45,000 $9,000
Nonspendable fund balance (Supplies) $54,000 $54,000
All the amounts shawn relate only to supplies. All Purchases during the year were paid in cash.
1) Assume the the city uses consumption method to account for supplies.
a) Reconstruct all journal entries relating to supplies that were made in 2018.
b) make any additional entries that would be required at year-end 2018 to close the accounts.
2) Assume instead that the city uses the purchases method to account for supplies. Assume also that the supplies inventyory balance as reported on the preclosing December 31, 2018 balance shee it $54,000 (not $81,000 as shown in the schedule), even though actual supplies on hand are still $81,000. (this adjustment is necessary because under the purchase method inventory is maintained throughtour the year at the beginning of year balance; it is adjusted only at year-end when closing entries are made.)
a) Reconstruct all journal entries relating to supplies that were made in 2018.
Make any additional entries that would be required at year-end 2018 to close the accounts.
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