Q3. Prepare journal entries to record the following transactions for a town for 2018. The Town records encumbrances only for its Supplies appropriation. (2 Marks)

a. The town adopted the following budget for the year:

Revenues:

Property taxes $412,500

Licenses and fees 52,500

Appropriations:

Salaries 382,500

Supplies 60,000

Interest 2,250

b. Property tax bills amounting to $412,500 were sent to the property owners.

c. Because property taxes were not due to be received for several months and the town needed cash to finance its activities, the town borrowed $150,000 from a local bank using tax anticipation notes.

d. The town paid salaries in the amount of $112,500.

e. The town sent out two purchase orders for supplies: purchase order A for $9,000 and purchase order B for $7,500.

f. The town received $195,000 from property owners in payment of their property taxes.

g. The town repaid the bank on its borrowing in transaction c. The amount paid was $151,500, which included interest of $1,500.

h. The town collected $22,500 for fishing licenses.

i. The town received the supplies ordered on purchase order A in transaction e. All the supplies arrived in good condition and the invoice for $9,150 was approved for payment.

j. The town Treasurer paid the invoice in transaction i. for $9,150.