Question

Prepare journal entries for Iron City’s general fund for the following, including any adjusting and closing entries on December 31, 20X1 (the end of the fiscal year):

a. Acquired a three-year fire insurance policy for $5,400 on September 1,
b. Ordered new furniture for the city council meeting room on September 17, 20X1, at an estimated cost of $15,600. The furniture was delivered on October 1, its actual cost was $15,200, its estimated life is 10 years, and it has no residual value.
c. Acquired supplies on November 4, 20X1, for $1,800. Iron City uses the consumption method of accounting. Supplies on hand on December 31, 20X1, were $1,120.

Answer 1

Journal entries are given below

Step-by-step explanation:

Journal entries for Iron City’s general fund are given below

A)

September 1, 20x1: (To record the acquisition of fire Insurance policy)

DEBIT CREDIT

Expenditures $5,400

Vouchers Payable $5,400

B)

September 17, 20x1 (To record the Encumbrances for the purchase order of new furniture)

DEBIT CREDIT

Encumbrances $15,600

Budgetary Fund Balance $15,600

October 01, 20x1 (To record the receipt of the furniture)

DEBIT CREDIT

Expenditures $15,200

Vouchers Payable $15,200

C)

November 4,20x1 (To record the acquisition of Supplies)

DEBIT CREDIT

Expenditures $1,800

Vouchers Payable $1,800

December 31,20x1 (To record the recognition of ending inventory of Supplies)

DEBIT CREDIT

Inventory of Supplies $1,120

Expenditures $1,120