Question

A city orders a new computer for its General Fund at an anticipated cost of $92,600. Its actual cost when received is $94,940. Payment is subsequently made. a. Prepare all required journal entries for both fund and government-wide financial statements.

Answer 1

The Journal entries are as follows:

(a) Government activities:

(i) Computer A/c Dr. $94,940

To Vouchers(or accounts) pay $94,940

(ii) vouchers(or accounts) pay A/c Dr. $94,940

To cash $94,940

(To record the payment)

**as a result of the purchase and payment, capital assets have gone up by the cost of the computer and cash has been reduced by the same amount

(b) General fund:

(i) Encumbrances control A/c Dr. $92,600

To Fund balance-reserved for encumbrances $92,600

(ii) Fund bal.-reserved for encumbrances A/c Dr. $92,600

To Encumbrances control $92,600

(iii) Expenditures control A/c Dr. $94,940

To vouchers payable $94,940

(iv) Vouchers Payable A/c Dr. $94,940

To Cash $94,940

Note:

On the statement of revenues, expenditures, and other changes in fund balance, an expenditure of $94,940 will be shown.

Cash will also decrease by that amount.