The following schedule indicates selected accounts from a city's pre-closing 2018 and post-closing 2017 general fund trial

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The following schedule indicates selected accounts from a city's pre-closing 2018 and post-closing 2017 general fund trial balances:
___________________________December 31, 2018 December 31, 2017
______________________________(Pre-closing) (Pre-closing)
Expenditures...............................$315,000...................................-
Supplies Inventory...........................81,000............................$54,000
Encumbrances.................................36,000...................................-
Reserve for Encumbrances..................45,000...............................9,000
Non-spendable fund balance (Supplies)...54,000..............................54,000
All the amounts shown relate only to supplies. All purchases during the year were paid in cash.
1. Assume that the city uses the consumption method to account for supplies.
a. Reconstruct all journal entries relating to supplies that were made in 2018.
b. Make any additional entries that would be required at year‐end 2018 to close the accounts.
2. Assume instead that the city uses the purchases method to account for supplies. Assume also that the supplies inventory balance as reported on the pre-closing December 31, 2018, balance sheet is $54,000 (not $81,000 as shown in the schedule), even though actual supplies on hand are still $81,000. (This adjustment is necessary because under the purchases method inventory is maintained throughout the year at the beginning of year balance; it is adjusted only at year‐end when the closing entries are made.)
a. Reconstruct all journal entries relating to supplies that were made in 2018.
b. Make any additional entries that would be required at year‐end 2018 to close the accounts.
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...
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Government and Not for Profit Accounting Concepts and Practices

ISBN: 978-1118983270

7th edition

Authors: Michael Granof, Saleha Khumawala, Thad Calabrese, Daniel Smith

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