Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method. The necessary entries assuming G town uses consumption method of accounting for inventories.

Question

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Answer 1

Question

Chapter 17, Problem 17.6E

a

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The necessary entries assuming G town uses consumption method of accounting for inventories.

a

Expert Solution

Explanation of Solution

Consumption method

Date	Particulars	Debit $	Credit $
	1. Entry for purchase of supplies
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Acquired inventory of supplies)

	2. Entry on September 30
9/30/20X2	Inventory of supplies	2,800
	Expenditures		2,800
	(Ending inventory recognized)

	Closing entry for Inventory of supplies
	Fund balance − Unreserved	2,800
	Fund balance − Reserved for inventories		2,800
	(Establish fund reserve for ending inventory)

	Fund balance − Unreserved	800
	Expenditures		800
	(Closing expenditures account)

9/30/20X3	3. Entry when supplies used during the year
	Expenditures	2,800
	Inventory of supplies		2,800
	(Expenditure for inventory consumed during the year recognized)

	Fund balance − reserved for inventories	2,800
	Fund balance − Unreserved		2,800
	(Fund balance reserved for inventory removed)

	Fund balance − unreserved	2,800
	Expenditures		2,800
	(Expenditure account closed)

Purchase of inventory recognized

Closing entries required on September 30, 20X2

Unused inventory recognized
Unused inventory value transferred to fund balance unreserved account
Expenditure account closed by crediting expenditure account

Entries when supplies used

Purchase of inventory recognized
Fund balance reserved for inventory removed
Expenditure account closed and transferred to fund balance unreserved account

b

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The entries assuming purchase method of accounting for inventory

b

Expert Solution

Explanation of Solution

Date	Particulars	Debit $	Credit $
	1. Purchase of supply
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Inventory of supplies acquire)
	2. Entries at the end of 20X2
9/30/20X2	Inventory of supplies	2,800
	Fund balance − reserved for inventory		2,800
	(Ending inventory of supplies recognized)

	Fund balance − Unreserved	3,600
	Expenditure		3,600
	(Expenditure account closed for the year)

	3. Entry at the end of 20X3
9/30/20X3	Fund balance − Reserved for inventories	2,800
	Inventory of supplies		2,800
	(Removal of fund balance reserved for inventories consumed)

Under the purchase method the entire purchase of supply is recorded by debiting the expenditure account and crediting the voucher payable account
At the end of the year unused inventory of supply transferred to the fund balance reserved for the inventory account
Expenditure account closed by crediting expenditure account and debit Fund balance unreserved
In 20X3 fund balance reserved for inventory is reversed.

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Students have asked these similar questions

DEF’s branch submitted the following data for the current year (its first year of operation): Sales of P203,500, Debit balance for Shipment from home office of P186,120, Operating Expenses of P18,755 and a credit balance for Home Office account of P48,125. Shipment to the branch are billed at cost. The ending inventory of the branch was P25,245. Compute for the correct balance of Branch Account- to be presented in the home office books?

Financial Statements of a Manufacturing Firm The following events took place for Focault Inc. during July 20Y2, the first month of operations as a producer of road bikes: Purchased $365,400 of materials Used $314,200 of direct materials in production . Incurred $272,000 of direct labor wages Applied factory overhead at a rate of 75% of direct labor cost . Transferred $758,600 of work in process to finished goods . Sold goods with a cost of $719,800 • Sold goods for $1,288,400 . Incurred $309,500 of selling expenses Incurred $115,200 of administrative expenses . a. Prepare the July income statement for Focault. Assume that Focault uses the perpetual inventory method. Focault Inc. Income Statement For the Month Ended July 31, 2012 Selling and administrative expenses: Total selling and administrative expenses b. Determine the inventory balances at the end of the first month of operations,

Inventory transactions can be derived from a limited amount of data.The following schedule shows the amounts related to supplies that a city debited and credited to the indicated accounts during a year (not necessarily the year-end balances), excluding closing entries. The organization records its budget, encumbers all its expenditures, and initially vouchers all payments. Itaccounts for supplies on a consumption basis. (in thousands) (In thousands ) Debits Credits Cash $0 $70 Inventory - 0 Vouchers payable - - (appropriations) 0 115 Encumbrances - - Expenditures 57 0 Reserve for encumbrances 57 93 Unassigned fund balance - 0 Nonspendable fund balance (supplies inventory) 0 - Some information is missing. By reconstructing the entries that the organization made during the year, you are to determine the missing data. The city began the year with $5,000 of supplies in inventory and endedthe year with $6,000.

Answer 2

Question

Chapter 17, Problem 17.6E

a

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The necessary entries assuming G town uses consumption method of accounting for inventories.

a

Expert Solution

Explanation of Solution

Consumption method

Date	Particulars	Debit $	Credit $
	1. Entry for purchase of supplies
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Acquired inventory of supplies)

	2. Entry on September 30
9/30/20X2	Inventory of supplies	2,800
	Expenditures		2,800
	(Ending inventory recognized)

	Closing entry for Inventory of supplies
	Fund balance − Unreserved	2,800
	Fund balance − Reserved for inventories		2,800
	(Establish fund reserve for ending inventory)

	Fund balance − Unreserved	800
	Expenditures		800
	(Closing expenditures account)

9/30/20X3	3. Entry when supplies used during the year
	Expenditures	2,800
	Inventory of supplies		2,800
	(Expenditure for inventory consumed during the year recognized)

	Fund balance − reserved for inventories	2,800
	Fund balance − Unreserved		2,800
	(Fund balance reserved for inventory removed)

	Fund balance − unreserved	2,800
	Expenditures		2,800
	(Expenditure account closed)

Purchase of inventory recognized

Closing entries required on September 30, 20X2

Unused inventory recognized
Unused inventory value transferred to fund balance unreserved account
Expenditure account closed by crediting expenditure account

Entries when supplies used

Purchase of inventory recognized
Fund balance reserved for inventory removed
Expenditure account closed and transferred to fund balance unreserved account

b

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The entries assuming purchase method of accounting for inventory

b

Expert Solution

Explanation of Solution

Date	Particulars	Debit $	Credit $
	1. Purchase of supply
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Inventory of supplies acquire)
	2. Entries at the end of 20X2
9/30/20X2	Inventory of supplies	2,800
	Fund balance − reserved for inventory		2,800
	(Ending inventory of supplies recognized)

	Fund balance − Unreserved	3,600
	Expenditure		3,600
	(Expenditure account closed for the year)

	3. Entry at the end of 20X3
9/30/20X3	Fund balance − Reserved for inventories	2,800
	Inventory of supplies		2,800
	(Removal of fund balance reserved for inventories consumed)

Under the purchase method the entire purchase of supply is recorded by debiting the expenditure account and crediting the voucher payable account
At the end of the year unused inventory of supply transferred to the fund balance reserved for the inventory account
Expenditure account closed by crediting expenditure account and debit Fund balance unreserved
In 20X3 fund balance reserved for inventory is reversed.

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Answer 3

Question

Chapter 17, Problem 17.6E

a

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The necessary entries assuming G town uses consumption method of accounting for inventories.

a

Expert Solution

Explanation of Solution

Consumption method

Date	Particulars	Debit $	Credit $
	1. Entry for purchase of supplies
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Acquired inventory of supplies)

	2. Entry on September 30
9/30/20X2	Inventory of supplies	2,800
	Expenditures		2,800
	(Ending inventory recognized)

	Closing entry for Inventory of supplies
	Fund balance − Unreserved	2,800
	Fund balance − Reserved for inventories		2,800
	(Establish fund reserve for ending inventory)

	Fund balance − Unreserved	800
	Expenditures		800
	(Closing expenditures account)

9/30/20X3	3. Entry when supplies used during the year
	Expenditures	2,800
	Inventory of supplies		2,800
	(Expenditure for inventory consumed during the year recognized)

	Fund balance − reserved for inventories	2,800
	Fund balance − Unreserved		2,800
	(Fund balance reserved for inventory removed)

	Fund balance − unreserved	2,800
	Expenditures		2,800
	(Expenditure account closed)

Purchase of inventory recognized

Closing entries required on September 30, 20X2

Unused inventory recognized
Unused inventory value transferred to fund balance unreserved account
Expenditure account closed by crediting expenditure account

Entries when supplies used

Purchase of inventory recognized
Fund balance reserved for inventory removed
Expenditure account closed and transferred to fund balance unreserved account

b

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The entries assuming purchase method of accounting for inventory

b

Expert Solution

Explanation of Solution

Date	Particulars	Debit $	Credit $
	1. Purchase of supply
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Inventory of supplies acquire)
	2. Entries at the end of 20X2
9/30/20X2	Inventory of supplies	2,800
	Fund balance − reserved for inventory		2,800
	(Ending inventory of supplies recognized)

	Fund balance − Unreserved	3,600
	Expenditure		3,600
	(Expenditure account closed for the year)

	3. Entry at the end of 20X3
9/30/20X3	Fund balance − Reserved for inventories	2,800
	Inventory of supplies		2,800
	(Removal of fund balance reserved for inventories consumed)

Under the purchase method the entire purchase of supply is recorded by debiting the expenditure account and crediting the voucher payable account
At the end of the year unused inventory of supply transferred to the fund balance reserved for the inventory account
Expenditure account closed by crediting expenditure account and debit Fund balance unreserved
In 20X3 fund balance reserved for inventory is reversed.

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Answer 4

Question

Chapter 17, Problem 17.6E

a

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The necessary entries assuming G town uses consumption method of accounting for inventories.

a

Expert Solution

Explanation of Solution

Consumption method

Date	Particulars	Debit $	Credit $
	1. Entry for purchase of supplies
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Acquired inventory of supplies)

	2. Entry on September 30
9/30/20X2	Inventory of supplies	2,800
	Expenditures		2,800
	(Ending inventory recognized)

	Closing entry for Inventory of supplies
	Fund balance − Unreserved	2,800
	Fund balance − Reserved for inventories		2,800
	(Establish fund reserve for ending inventory)

	Fund balance − Unreserved	800
	Expenditures		800
	(Closing expenditures account)

9/30/20X3	3. Entry when supplies used during the year
	Expenditures	2,800
	Inventory of supplies		2,800
	(Expenditure for inventory consumed during the year recognized)

	Fund balance − reserved for inventories	2,800
	Fund balance − Unreserved		2,800
	(Fund balance reserved for inventory removed)

	Fund balance − unreserved	2,800
	Expenditures		2,800
	(Expenditure account closed)

Purchase of inventory recognized

Closing entries required on September 30, 20X2

Unused inventory recognized
Unused inventory value transferred to fund balance unreserved account
Expenditure account closed by crediting expenditure account

Entries when supplies used

Purchase of inventory recognized
Fund balance reserved for inventory removed
Expenditure account closed and transferred to fund balance unreserved account

b

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The entries assuming purchase method of accounting for inventory

b

Expert Solution

Explanation of Solution

Date	Particulars	Debit $	Credit $
	1. Purchase of supply
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Inventory of supplies acquire)
	2. Entries at the end of 20X2
9/30/20X2	Inventory of supplies	2,800
	Fund balance − reserved for inventory		2,800
	(Ending inventory of supplies recognized)

	Fund balance − Unreserved	3,600
	Expenditure		3,600
	(Expenditure account closed for the year)

	3. Entry at the end of 20X3
9/30/20X3	Fund balance − Reserved for inventories	2,800
	Inventory of supplies		2,800
	(Removal of fund balance reserved for inventories consumed)

Under the purchase method the entire purchase of supply is recorded by debiting the expenditure account and crediting the voucher payable account
At the end of the year unused inventory of supply transferred to the fund balance reserved for the inventory account
Expenditure account closed by crediting expenditure account and debit Fund balance unreserved
In 20X3 fund balance reserved for inventory is reversed.

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Answer 5

Chapter 17, Problem 17.6E

a

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The necessary entries assuming G town uses consumption method of accounting for inventories.

a

Expert Solution

Explanation of Solution

Consumption method

Date	Particulars	Debit $	Credit $
	1. Entry for purchase of supplies
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Acquired inventory of supplies)

	2. Entry on September 30
9/30/20X2	Inventory of supplies	2,800
	Expenditures		2,800
	(Ending inventory recognized)

	Closing entry for Inventory of supplies
	Fund balance − Unreserved	2,800
	Fund balance − Reserved for inventories		2,800
	(Establish fund reserve for ending inventory)

	Fund balance − Unreserved	800
	Expenditures		800
	(Closing expenditures account)

9/30/20X3	3. Entry when supplies used during the year
	Expenditures	2,800
	Inventory of supplies		2,800
	(Expenditure for inventory consumed during the year recognized)

	Fund balance − reserved for inventories	2,800
	Fund balance − Unreserved		2,800
	(Fund balance reserved for inventory removed)

	Fund balance − unreserved	2,800
	Expenditures		2,800
	(Expenditure account closed)

Purchase of inventory recognized

Closing entries required on September 30, 20X2

Unused inventory recognized
Unused inventory value transferred to fund balance unreserved account
Expenditure account closed by crediting expenditure account

Entries when supplies used

Purchase of inventory recognized
Fund balance reserved for inventory removed
Expenditure account closed and transferred to fund balance unreserved account

b

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The entries assuming purchase method of accounting for inventory

b

Expert Solution

Explanation of Solution

Date	Particulars	Debit $	Credit $
	1. Purchase of supply
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Inventory of supplies acquire)
	2. Entries at the end of 20X2
9/30/20X2	Inventory of supplies	2,800
	Fund balance − reserved for inventory		2,800
	(Ending inventory of supplies recognized)

	Fund balance − Unreserved	3,600
	Expenditure		3,600
	(Expenditure account closed for the year)

	3. Entry at the end of 20X3
9/30/20X3	Fund balance − Reserved for inventories	2,800
	Inventory of supplies		2,800
	(Removal of fund balance reserved for inventories consumed)

Under the purchase method the entire purchase of supply is recorded by debiting the expenditure account and crediting the voucher payable account
At the end of the year unused inventory of supply transferred to the fund balance reserved for the inventory account
Expenditure account closed by crediting expenditure account and debit Fund balance unreserved
In 20X3 fund balance reserved for inventory is reversed.

Answer 6

Chapter 17, Problem 17.6E

a

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The necessary entries assuming G town uses consumption method of accounting for inventories.

a

Expert Solution

Explanation of Solution

Consumption method

Date	Particulars	Debit $	Credit $
	1. Entry for purchase of supplies
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Acquired inventory of supplies)

	2. Entry on September 30
9/30/20X2	Inventory of supplies	2,800
	Expenditures		2,800
	(Ending inventory recognized)

	Closing entry for Inventory of supplies
	Fund balance − Unreserved	2,800
	Fund balance − Reserved for inventories		2,800
	(Establish fund reserve for ending inventory)

	Fund balance − Unreserved	800
	Expenditures		800
	(Closing expenditures account)

9/30/20X3	3. Entry when supplies used during the year
	Expenditures	2,800
	Inventory of supplies		2,800
	(Expenditure for inventory consumed during the year recognized)

	Fund balance − reserved for inventories	2,800
	Fund balance − Unreserved		2,800
	(Fund balance reserved for inventory removed)

	Fund balance − unreserved	2,800
	Expenditures		2,800
	(Expenditure account closed)

Purchase of inventory recognized

Closing entries required on September 30, 20X2

Unused inventory recognized
Unused inventory value transferred to fund balance unreserved account
Expenditure account closed by crediting expenditure account

Entries when supplies used

Purchase of inventory recognized
Fund balance reserved for inventory removed
Expenditure account closed and transferred to fund balance unreserved account

Answer 7

Chapter 17, Problem 17.6E

a

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The necessary entries assuming G town uses consumption method of accounting for inventories.

Answer 8

a

Expert Solution

Explanation of Solution

Consumption method

Date	Particulars	Debit $	Credit $
	1. Entry for purchase of supplies
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Acquired inventory of supplies)

	2. Entry on September 30
9/30/20X2	Inventory of supplies	2,800
	Expenditures		2,800
	(Ending inventory recognized)

	Closing entry for Inventory of supplies
	Fund balance − Unreserved	2,800
	Fund balance − Reserved for inventories		2,800
	(Establish fund reserve for ending inventory)

	Fund balance − Unreserved	800
	Expenditures		800
	(Closing expenditures account)

9/30/20X3	3. Entry when supplies used during the year
	Expenditures	2,800
	Inventory of supplies		2,800
	(Expenditure for inventory consumed during the year recognized)

	Fund balance − reserved for inventories	2,800
	Fund balance − Unreserved		2,800
	(Fund balance reserved for inventory removed)

	Fund balance − unreserved	2,800
	Expenditures		2,800
	(Expenditure account closed)

Purchase of inventory recognized

Closing entries required on September 30, 20X2

Unused inventory recognized
Unused inventory value transferred to fund balance unreserved account
Expenditure account closed by crediting expenditure account

Entries when supplies used

Purchase of inventory recognized
Fund balance reserved for inventory removed
Expenditure account closed and transferred to fund balance unreserved account

Answer 9

a

Expert Solution

Answer 10

a

Expert Solution

Answer 11

Expert Solution

Answer 12

b

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The entries assuming purchase method of accounting for inventory

b

Expert Solution

Explanation of Solution

Date	Particulars	Debit $	Credit $
	1. Purchase of supply
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Inventory of supplies acquire)
	2. Entries at the end of 20X2
9/30/20X2	Inventory of supplies	2,800
	Fund balance − reserved for inventory		2,800
	(Ending inventory of supplies recognized)

	Fund balance − Unreserved	3,600
	Expenditure		3,600
	(Expenditure account closed for the year)

	3. Entry at the end of 20X3
9/30/20X3	Fund balance − Reserved for inventories	2,800
	Inventory of supplies		2,800
	(Removal of fund balance reserved for inventories consumed)

Under the purchase method the entire purchase of supply is recorded by debiting the expenditure account and crediting the voucher payable account
At the end of the year unused inventory of supply transferred to the fund balance reserved for the inventory account
Expenditure account closed by crediting expenditure account and debit Fund balance unreserved
In 20X3 fund balance reserved for inventory is reversed.

Answer 13

b

To determine

Concept introduction:

Expenditures for inventory: Governmental units usually maintain a small amount of inventory in office supplies. They are two methods using which expenditures of inventory accounted for. The purchase method recognizes entire expenditure for inventory in the period when supplies are acquired. Only the amount of inventory consumed will be recognized in the case of the consumption method.

The entries assuming purchase method of accounting for inventory

Answer 14

b

Expert Solution

Explanation of Solution

Date	Particulars	Debit $	Credit $
	1. Purchase of supply
8/8/20X2	Expenditures	3,600
	Vouchers payable		3,600
	(Inventory of supplies acquire)
	2. Entries at the end of 20X2
9/30/20X2	Inventory of supplies	2,800
	Fund balance − reserved for inventory		2,800
	(Ending inventory of supplies recognized)

	Fund balance − Unreserved	3,600
	Expenditure		3,600
	(Expenditure account closed for the year)

	3. Entry at the end of 20X3
9/30/20X3	Fund balance − Reserved for inventories	2,800
	Inventory of supplies		2,800
	(Removal of fund balance reserved for inventories consumed)

Under the purchase method the entire purchase of supply is recorded by debiting the expenditure account and crediting the voucher payable account
At the end of the year unused inventory of supply transferred to the fund balance reserved for the inventory account
Expenditure account closed by crediting expenditure account and debit Fund balance unreserved
In 20X3 fund balance reserved for inventory is reversed.