Question

Prepare journal entries for Iron City’s general fund for the following, including any adjusting and closing entries on December 31, 20X1 (the end of the fiscal year):

a. Acquired a three-year fire insurance policy for $5,400 on September 1,
b. Ordered new furniture for the city council meeting room on September 17, 20X1, at an estimated cost of $15,600. The furniture was delivered on October 1, its actual cost was $15,200, its estimated life is 10 years, and it has no residual value.
c. Acquired supplies on November 4, 20X1, for $1,800. Iron City uses the consumption method of accounting. Supplies on hand on December 31, 20X1, were $1,120.

Answer 1

Answer:

Journal entries are given below

Explanation:

Journal entries for Iron City’s general fund are given below

A)

September 1, 20x1: (To record the acquisition of fire Insurance policy)

                                               DEBIT          CREDIT

Expenditures                       $5,400  

Vouchers Payable                                     $5,400

 

B)

September 17, 20x1 (To record the Encumbrances for the purchase order of new furniture)

                                               DEBIT        CREDIT

Encumbrances                     $15,600

Budgetary Fund Balance                         $15,600

   

 

October 01, 20x1 (To record the receipt of the furniture)

                                              DEBIT          CREDIT

Expenditures                      $15,200  

Vouchers Payable                                      $15,200

 

C)

November 4,20x1 (To record the acquisition of Supplies)

                                               DEBIT          CREDIT

Expenditures                        $1,800  

Vouchers Payable                                      $1,800

December 31,20x1 (To record the recognition of ending inventory of Supplies)

                                               DEBIT          CREDIT

Inventory of Supplies        $1,120  

Expenditures                                              $1,120