Final answer:
The sale of a surplus ambulance by the City of Castletown in the General Fund should be recorded with a credit to other financing sources for the proceeds from the sale of the general capital asset.
Step-by-step explanation:
If the City of Castletown sells a surplus ambulance, the entry to record this sale in the General Fund should include a credit to other financing sources—proceeds from sale of general capital assets.
This is because when a government entity sells a capital asset, the proceeds are considered a financing source, rather than revenue from operations.
Be sure to not confuse this with entries that would typically affect the capital assets account directly, like adjustments for depreciation or the initial recording of the asset.
The sale of a surplus ambulance is a one-time financial transaction, meaning it does not affect the ongoing budgetary accounting for encumbrances or the capitalization of vehicles and equipment, which is why we would not debit encumbrances or credit the Vehicles and Equipment capital assets account in this case.
The correct entry to record the sale of a surplus ambulance on the books of the General Fund of the City of Castletown is option a. A credit to other financing sources—proceeds from sale of general capital assets.