Question

The city of Starkville has a solid waste landfill enterprise fund. Future costs to close the landfill and post closure costs are expected to total $100,000,000. The total capacity of the landfill is expected to be 25,000,000 tons of waste. This year citizens and trash companies dumped 500,000 tons of waste in the landfill, which charges $5 per ton of waste payable in cash. The journal entry to record close and post closure care costs for the current year would be

a. Debit expense for $2,000,000; credit accrued cost payable for $2,000,000
b. Debit accrued cost payable for $2,000,000; credit expense for $2,000,000
c. Debit accrued cost payable for $2,500,000; credit expense for $2,500,000
d. Debit expense for $2,500,000; credit accrued cost payable for $2,500,000

Answer 1

The correct journal entry to record close and post closure care costs for the current year in the Starkville landfill enterprise fund is to debit expense for $2,500,000 and credit accrued cost payable for $2,500,000.

Step-by-step explanation:

The correct journal entry to record close and post closure care costs for the current year would be:

Debit expense for $2,500,000; credit accrued cost payable for $2,500,000 (option d).

The city of Starkville has a solid waste landfill enterprise fund, and the future costs to close the landfill and post closure costs are expected to total $100,000,000. To record these costs in the current year, the expense of $2,500,000 is debited, indicating an increase in expenses, and the accrued cost payable of $2,500,000 is credited, indicating a liability to be paid in the future.