The County of Maxnell decides to create a sanitation department and offer its se
ID: 2404362 • Letter: T
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.
Explanation / Answer
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
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.