Question

The following events and transactions relating to the purchase and use of supplies inventory for Jedville Township:

1. On March 21, 2019, supplies were ordered at an estimated cost of $847,000.

2. Supplies were received on April 4, 2019, and the actual cost of $853,000 was paid in cash.

3. On December 31, 2019, $76,000 in supplies remain. (Assume there was no beginning balance.)

4. On February 23, 2020, supplies were ordered at an estimated cost of $855,000.

5. Supplies were received on March 6, 2020, and the actual cost of $866,000 was paid in cash.

6. On December 31, 2020, $60,000 in supplies remain.

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

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

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

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

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

Transaction 03 (b): Record the year-end closure of expenditure account of $853,000

Transaction 04: Record the order of supplies of $855,000 Transaction 05 (a): Record the receipt of supplies ordered for $855,000

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

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

Transaction 06 (b): Record the year-end closure of expenditure account of $866,000

Answer 1

Solution :- Camt & Journal entrics Debit particulars Date su 1000 847000 Trans Cash & Bank Alc. or To Sales the a (Being Sales made) 84-1000 Tran ala) 847000 purchases al or TO creditors theer (Being purchase done) creditors the or 853000 TO Cash & Bank Alca (Being paid for purchase) b) 853000 Tran 3 cal 76 oto 06) closing stock the or 76000 To fund balance the a (Being ady to fund bal) profit & Loss ale or 853000 TO Expenditure Ale cz (Being closure of Exp.) Cash & Bank Alc or To sales ale a Sales made) 853000 Tran 4 855000 855 000 Tran 566) 855000 856000 purchases ale Dr. To creditor ale a (Being purchase done) creditors Alcor to cash & Bank Alca (Being paid to creditors) % 66000 866000

(6 000 Tran 6(a) (6000 closing Stock Alcor To fund bal. Ale a Being adjust on fund balance) 666) profit & Loss Alc or 866000 To Expenditure Ale a 866000 (Being closure of Expenditure)