strayer.acc410.2011.wk4.sln

strayer.acc410.2011.wk4.sln - Acc 410 Week 4 Solution to...

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Acc 410 – Week 4 Solution to Homework 5-3 (3 points – 1 per part) 1. Purchases method (a) Supplies expenditure $22,000 Accounts payable $22,000 To record the acquisition of supplies (b) Accounts payable $19,000 Cash $19,000 To record the payment of amounts owed (c) Supplies inventory $ 2,000 Fund balance—nonspendable $ 2,000 To increase the balance in inventory and the related nonspendable fund balance from the beginning-of-year balance of $3,000 to the end-of-year balance of $5,000 2. Consumption method (a) Supplies inventory $22,000 Accounts payable $22,000 To record the acquisition of supplies (b) Accounts payable $19,000 Cash $19,000 To record the payment of amounts owed (c) Supplies expenditure $20,000 Supplies inventory $20,000 To record the consumption of inventory Fund balance—unassigned $2,000 Fund balance—nonspendable $2,000 To increase the nonspendable fund balance from the beginning-of-year balance of $3,000 to the end-of-year balance of $5,000. This entry is not required and would not be made by most governments. It is included to illustrate how a government could establish a nonspendable fund balance, if it opts to do so, even though it accounts for supplies on a consumption basis. 3. The balance sheet under both methods would reflect the same amount of inventory and, therefore, the same total fund balance. However, the statement of revenues and expenditures would differ. Under the purchases method, supplies expenditure is debited for the amount of inventory purchased and nonspendable fund balance is charged (or credited) with the change in inventory during the year. Under the consumption method, the supplies expenditure is debited with the amount used and no adjustment need be made to fund balance (although a government may elect to transfer an amount equal to the change in inventory to (or from) unassigned fund balance from (or to) nonspendable fund balance).
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5-6 (5 points – 1 per part) 1. Nonreciprocal transfer-out (to internal service fund)
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This note was uploaded on 08/17/2011 for the course ACCT 410 taught by Professor Khalib during the Spring '11 term at Strayer.

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strayer.acc410.2011.wk4.sln - Acc 410 Week 4 Solution to...

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