During July 2016, the first month of the 2017 fiscal year, the Town of Willingdon issued the

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During July 2016, the first month of the 2017 fiscal year, the Town of Willingdon issued the following purchase orders and contracts (Problem 3-20):

General government.......................... $ 800,000

Public safety.................................. 400,000

Public works................................... 75,000

Health and welfare............................ 65,000

Miscellaneous.................................. 25,000

Total purchase orders and contracts........ $1,365,000

Required

a. Show the general journal entry to record the issuance of the purchase orders and contracts. Show entries in subsidiary ledger accounts as well as general ledger accounts.

b. Explain why state and local governments generally record the estimated amounts of purchase orders and contracts in the accounts of budgeted governmental funds, whereas business entities generally do not prepare formal entries for purchase orders.

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Accounting for Governmental and Nonprofit Entities

ISBN: 978-0078025822

17th edition

Authors: Jacqueline Reck, Suzanne Lowensohn, Earl Wilson

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