Question

1. General City’s general fund reported a supplies inventory costing $410 at the beginning of the fiscal year. During the year, General City purchased and received supplies $71,300. Supplies costing $590 are on hand at the end of the fiscal year.

Prepare the journal entries made this year using the (a) consumption and (b) purchases methods. For the purchase method, the general fund reports supplies inventory on its balance sheet.

Answer 1

Ans: Journal Entries Using consumption

S.no	Account title and explanation	Debit($)	Credit($)
	Fund balance-assigned	410
	Fund Balance-unassigned		410
	( to record supplies inventory)
	Supplies inventory	71,300
	Voucher Payable		71,300
	( to record purchase of supplies)
	Expenditure{410+71,300-590}	71,120
	Supplies inventory		71,120
	( to record consumption of supplies)
	Fund Balance-unassigned	590
	Fund Balance-Assigned		590
	(

Journal Entries Using Purchases method

S.no	Account title and explanation	Debit($)	Credit($)
	Fund balance-assigned	410
	Fund Balance-unassigned		410
	( to record supplies inventory)
	Expenditures	71,300
	Voucher Payable		71,300
	( to record purchase of supplies)
	Supplies inventory	590
	Fund Balance-Assigned		590