During July 2016, the first month of the 2017 fiscal year, the Town of Willingdon issued the
Question:
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.
Step by Step Answer:
Accounting for Governmental and Nonprofit Entities
ISBN: 978-0078025822
17th edition
Authors: Jacqueline Reck, Suzanne Lowensohn, Earl Wilson