In 2015, Bay City purchased supplies valued at $350,000. At the end of the year, $65,000 of

Question:

In 2015, Bay City purchased supplies valued at $350,000. At the end of the year, $65,000 of the supplies were still in the inventory. No supplies were on hand at the beginning of the year. The city uses the purchases method to account for supplies.

Required:

A. Prepare the journal entry necessary to report the supplies as an asset in the balance sheet of Bay City.

B. What amount of expenditures for supplies will be shown in the statement of revenues, expenditures, and changes in fund balance?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...