Question

Clarion Township was approved for a grant from the federal government. The grant provides for reimbursement up to $200,000 for expenditures incurred to weatherize homes for low-income persons. Upon notification that the grant had been approved, but before weatherization activities have begun, Clarion Township should:

Answer 1

Make no journal entry

Step-by-step explanation:

A journal entry is defined as a record of a financial transaction by an entity. Economic and non economic transactions are recorded in the accounting journal to show debits and credits of the business.

In this scenario Clarion Township was approved for a grant from the federal government.

However upon notification of the approval no journal entry is to be recorded because weatherization has not started, so no expense has been incurred.

Journal entry is only made when cost is incurred or revenue is earned.