Question

The Town of Hail had the following transactions.

1. Placed a purchase order in the amount of USD 14,000 for supplies.

2. Placed a purchase order with a car dealer to replace the town’s only police car. The expected cost of the car is USD 31,000.

3. The police car was delivered to town officials with an invoice of USD 32,500. The invoice was approved and paid.

4. Unfortunately, some of the supplies ordered (in #1) were back ordered and could not be shipped. However, supplies that were expected to cost USD 8,000 were received along with an invoice of USD 7,900. The invoice was paid when received.

5. The remaining supplies that were ordered (in #1) were received. The invoice in the amount of USD 6,000 was paid.

Required: Prepare the general journal entries necessary to record the budget and operating transactions 1- 5.

Answer 1

Solution :-
No accounting entry is required to be passed at the time of placing a purchase order of fire department's attack truck and departmental uniforms. Fire Truck is a Tangible asset and classified as vehicle under Property Plant & Equipment. Uniform is a contractual expenditure of the fire department and classified as an operating expense which is to be charged to Profit and Loss account.
Date Of entry	General Journal	Debit	Credit
Date of receipts of vehicle	PPE -Vehicles	$ 32,500
	Supplier		$ 32,500
	( To record truck purchased from car dealer )
Date of payment to car dealer	Supplier	$ 32,500
	Cash		$ 32,500
	( Payment made to Car dealer against truck Purchased )
date of Receipt of uniform	Operating Exp-Uniform	$ 7,900
	Supplier		$ 7,900
	( uniform purchased from supplier )
Date of payment to uniform Supplier	Supplier	$ 7,900
	Cash		$ 7,900
	( payment made to uniform supplier against uniform purchased )
Date of receipts of uniform	Operating Exp-Uniform	$ 6000
	Supplier		$ 6000
	(uniform purchased from Supplier)
Date of payment to uniform Supplier	Supplier	$ 6000
	Cash		$ 6000
	( payment made to uniform supplier against uniform purchased )
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