Question

The following events and transactions relate 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 $850,000 was paid in cash.

3. On December 31, 2019, $70,000 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 $860,000 was paid in cash.

6. 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. (Remember to prepare year-end adjusting and closing entries, if necessary.)

b. Prepare journal entries to record the inventory transactions in Jedville’s General Fund using the purchases method of accounting for inventory. (Remember to prepare year-end adjusting and closing entries, if necessary.)

c. Prepare journal entries to record the inventory transactions in Jedville’s governmental activities ledger. (Remember to prepare year-end adjusting and closing entries, if necessary.)

d. Compare the expenditure and expense account totals each year under the three methods.

e. How will inventory balances be presented on the financial statements at the end of each year?

Answer 1

Answer(a):

Note: Year-end adjusting is not required to be passed under this method

Answer(b):

Answer(c):

Answer(d):