Question

Journal entries and financial statements for a Custodial Fund

The County of Boonsville operates a jail, and some inmates work in the jail, for which they are compensated. Their earnings are deposited into an account established and held by the County in the name of individual inmates. Families of the inmates also can deposit monies into an inmate’s account. The inmates can use the funds in their accounts to purchase items from the commissary or order certain items, such as magazines or books, from outside vendors. Any balance remaining in the account of an inmate is paid to him/her upon release from jail.

The following are selected transactions incurred during calendar year 2022 that are related to the fund.
1. The County deposits $44,000 in inmate accounts during the year.
2. Family members contribute an additional $16,000 to inmate accounts during the year.
3. Inmates purchase $28,000 of goods from the commissary during the year.
4. Inmates make purchases of $32,000 from outside vendors during the year.
5. Inmates that are released during the year close accounts that have a balance of $6,400.

a) Prepare the journal entries necessary to record these transactions on the books of the County of Boonsville Jail Custodial Fund. Assume that all purchases made by inmates are considered distributions to inmates.

Answer 1

To record the transactions for the County of Boonsville Jail Custodial Fund, you would need to make journal entries for the deposits, contributions, purchases, and closure of inmate accounts.

Step-by-step explanation:

To record these transactions in the books of the County of Boonsville Jail Custodial Fund, you would need to make the following journal entries:

1. Journal Entry 1: Debit Custodial Fund Cash $44,000, Credit Inmate Accounts Receivable $44,000. This records the deposit of $44,000 into the inmate accounts.
2. Journal Entry 2: Debit Custodial Fund Cash $16,000, Credit Inmate Accounts Receivable $16,000. This records the additional contribution of $16,000 to the inmate accounts.
3. Journal Entry 3: Debit Inmate Accounts Receivable $28,000, Credit Custodial Fund Revenue $28,000. This records the purchase of $28,000 of goods from the commissary.
4. Journal Entry 4: Debit Inmate Accounts Receivable $32,000, Credit Custodial Fund Revenue $32,000. This records the purchase of $32,000 of goods from outside vendors.
5. Journal Entry 5: Debit Inmate Accounts Receivable $6,400, Credit Custodial Fund Cash $6,400. This records the closure of accounts for inmates who are released, with a remaining balance of $6,400.