Question
In: Accounting
Sugar City uses the purchases method to record all prepayments. The City has a 6/30 fiscal...
Sugar City uses the purchases method to record all prepayments. The City has a 6/30 fiscal year-end. On 12/31/06, the City purchased a three-year insurance policy covering all city owned vehicles accounted acquired by the General Fund to be used in general government activity. Cost of the policy was $360,000. After the 6/30/07 closing entries, the appropriate balance sheet accounts and balances associated with this transaction are in the City s General Fund
|
Prepaid Insurance $300,000; Expenditure $60,000. |
||
|
Prepaid Insurance $300,000; Expenditures $360,000 |
||
|
Prepaid Insurance $0; Expenditure $360,000. |
||
|
Prepaid Insurance $0; Expenditures $60,000. |
Solutions
Expert Solution
| The cost of insurance policy acquired by the General Fund will be shows as an Expenditure in City s General Fund. |
| The balances associated with this transaction in the City's General Fund are: |
| Prepaid Insurance $0; Expenditure $360,000. |
| Option C is correct |
ekkarill92 answered 3 years agoRelated Solutions
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