Question

The following events and transactions relating to the purchase and use of supplies inventory for Jedville Township: On March 21, 2019, supplies were ordered at an estimated cost of $847,000. Supplies were received on April 4, 2019, and the actual cost of $853,000 was paid in cash. On December 31, 2019, $76,000 in supplies remain. (Assume there was no beginning balance.) On February 23, 2020, supplies were ordered at an estimated cost of $855,000. Supplies were received on March 6, 2020, and the actual cost of $866,000 was paid in cash. On December 31, 2020, $60,000 in supplies remain.

Required: a. Prepare journal entries to record the inventory transactions in Jedville's General Fund using the consumption method of accounting for inventory. Record the year-end adjusting and closing entries wherever necessary.

Part A Purchases Method

Transaction 01: Record the order of supplies of $847,000

Transaction 02 (a): Record the receipt of supplies ordered cost of $847,000

Transaction 02 (b): Record the payment $853,000 made for supplies received

Transaction 03 (a): Record the supplies $777,000 consumed during the year 2019

Transaction 03 (b): Record the year adjustment to fund balance on account of $76,000 supplies remaining

Transaction 03 (c): Record the year-end closure of expenditure account $777,000

Transaction 04: Record the order of supplies cost $855,000

Transaction 05 (a): Record the receipt of supplies ordered of $855,000

Transaction 05 (b): Record the payment $866,000 made for supplies received

Transaction 06 (a): Record the supplies consumed during the year 2020 assuming the remaining supplies equal $882,000

Transaction 06 (b): Record the year-end adjustment to fund balance of $16,000 in supplies remaining

Transaction 06 (c): Record the year-end closure of expenditure account of $882,000

Answer 1

Date	Particulars	Debit($)	Credit($)
March 21, 2019	No entry
April 4, 2019	Supplies a/c Dr. To cash a/c (To record the purchase of supplies against cash)	853,000	853,000
December 31, 2019	Supplies expense a/c Dr. To Supplies a/c (To record the adjustment entry for supplies)	777,000	777,000
December 31, 2019	Income summry a/c Dr. To supplies expense a/c (To record the closing entry for supplies expenditure)	777,000	777,000
February 23, 2020	No entry
March 6, 2020	Supplies a/c Dr. To cash a/c (To record the purchase of supplies against cash)	866,000	866,000
December 31, 2020	Supplies expense a/c Dr. To Supplies a/c (76,000 + 866,000 - 60,000 = 882,000) (To record the adjustment entry for supplies)	882,000	882,000
December 31, 2020	Income summry a/c Dr. To supplies expense a/c (To record the closing entry for supplies expenditure)	882,000	882,000