Question

The County of Maxnell decides to create a sanitation department and offer its services to the public for a fee. As a result, county officials plan to account for this activity within the enterprise funds. Make journal entries for this operation for the following 2015 transactions as well as necessary adjusting entries at the end of the year. Assume that the information is being gathered for fund financial statements. Only entries for the sanitation department are required here:

January 1—Received unrestricted funds of $160,000 from the general fund as permanent financing.

February 1—Borrowed an additional $130,000 from a local bank at a 12 percent annual interest rate.

March 1—Ordered a truck at an expected cost of $108,000.

April 1—Received the truck and made full payment. The actual cost amounted to $110,000. The truck has a 10-year life and no salvage value. Straight-line depreciation is to be used.

May 1—Received a $20,000 cash grant from the state to help supplement the pay of the sanitation workers. The money must be used for that purpose.

June 1—Rented a garage for the truck at a cost of $1,000 per month and paid 12 months of rent in advance.

July 1—Charged citizens $13,000 for services. Of this amount, $11,000 has been collected.

August 1—Made a $10,000 cash payment on the 12 percent note of February 1. This payment covers both interest and principal.

September 1—Paid salaries of $18,000 using the grant received on May 1.

October 1—Paid truck maintenance costs of $1,000.

November 1—Paid additional salaries of $10,000, first using the rest of the grant money received May 1.

December 31—Sent invoices totaling $19,000 to customers for services over the past six months. Collected $3,000 cash immediately.

Answer 1

Journal entries
Date	Account Title and Explanation	Debit	Credit
01-Jan	Cash	$1,600,000
	Trasferred from General Fund		$160,000
	To Record Received of Fund
01-Feb	Cash	$130,000
	Note Payable		$130,000
	To Record Borrowed fund from bAnk
01-Apr	Truck	$110,000
	Cash		$110,000
	To Record Purchase of Truck
01-May	Cash	$20,000
	Grant Revenue		$20,000
	To Record received of Grant
01-Jun	Prepaid Rent (1000X12)	$12,000
	Cash		$12,000
	To Record paymen tof Rent in Advance
01-Jul	Account Receivable	$13,000
	Service Revenue		$13,000
	To Recors Service revenue
	Cash	$11,000
	Accoutn Receivable		$11,000
	To Record Received agst AR
01-Aug	Note Payable (10000-7800)	$2,200
	Interest Expense (130000*12%*50%)	$7,800
	Cash		$10,000
	To Record repayment of Note with Interest
01-Sep	Salaries Expense	$18,000
	Cash		$18,000
	To Record Salary Expense Paid
01-Oct	Maintainance Expense	$1,000
	Cash		$1,000
	To Record Maintainance Expense
01-Nov	Salaries Expense	$10,000
	Cash		$10,000
	To Record Salary Expense Paid
01-Dec	Account Receivable	$19,000
	Service Revenue		$19,000
	To Recors Service revenue
	Cash	$3,000
	Accoutn Receivable		$3,000
	To Record Received agst AR