Question

The City of Hopeville had opening balances on January 1, 2022 of $400,000 in Cash and $400,000 in Fund Balance-Unassigned.

1. During the year 2022, the City encumbered $85,000: $80,000 was for supplies and $5,000 was for a fence.

2. By year end, $80,000 for supplies had been unencumbered for the exact amount of the original encumbrance.

3. Seventy percent of all expenditures had been paid in cash by fiscal year end, December 31, 2022.

Required:

A) Prepare all journal entries for the year 2022 (4 of them), including closing entries (3 of them)

B) Prepare a December 31, 2022 Balance Sheet for the City of Hopeville.

Answer 1

Solution:

A)

Journal of City of Hopeville

Dr.		Cr.
Date	Particulars	Amount($)	Amount ($)
1-Jan-2020	Cash A/c Dr.	4,00,000
	To Fund A/c		4,00,000
	(For opening entry passed)
	Supplies A/c Dr.	80,000
	Fence A/c Dr.	5,000
	To vendor		85,000
	(For supplies and fence purchased in credit)
31-Dec-2020	Vendor Dr.	80,000
	To cash A/c		80,000
	(for due amount of supplies settled off)
31-Dec-2020	Vendor Dr.	3,500
	To cash A/c		3,500
	(For cash paid to vendor of fence purchased)

B)   Balance Sheet of city of Hopeville

Liabilities	Amount ($)	Assets	Amount ($)
Fund	4,00,000	Cash	3,16,500
Creditor (Fence)	1500	Supplies	80,000
		Fence	5,000
	4,01,500		4,01,500