The Village of Dove ruses the purchases method of accounting for its inventories of supplies in the General Fund. GASB standards, however, require that the consumption method be used for the government-wide financial statements. Because its computer system is very limited, the Village uses a periodic inventory system, adjusting inventory balances based on a physical inventory of supplies at year-end. When supplies are received during the year, the Village records expenditures and expenses in the general journals of the General Fund and governmental activities, respectively. The Village’s inventory records showed the following information for the fiscal year ending December 31, 2014: Balance of inventory, December 31, 2013 $132,000 Purchases of inventory during 2014 772,000 Balance of inventory, December 31, 2014 150,000 Required a. Provide the required adjusting entries at the end of 2014, assuming that the December 31, 2014, balance of Inventory of Supplies has been confirmed by physical count. Make entries in the general journals of both the General Fund (omitting subsidiary detail) and governmental activities at the government wide level. b. Assume that the General Fund uses the consumption method for reporting inventories of supplies rather than the purchases method. Make the required adjusting entries for the General Fund and governmental activities at the government-wide level

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The Village of Dove ruses the purchases method of accounting for its inventories of supplies in the General Fund. GASB standards, however, require that the consumption method be used for the government-wide financial statements. Because its computer system is very limited, the Village uses a periodic inventory system, adjusting inventory balances based on a physical inventory of supplies at year-end. When supplies are received during the year, the Village records expenditures and expenses in the general journals of the General Fund and governmental activities, respectively. The Village’s inventory records showed the following information for the fiscal year ending December 31, 2014: Balance of inventory, December 31, 2013 $132,000 Purchases of inventory during 2014 772,000 Balance of inventory, December 31, 2014 150,000 Required a. Provide the required adjusting entries at the end of 2014, assuming that the December 31, 2014, balance of Inventory of Supplies has been confirmed by physical count. Make entries in the general journals of both the General Fund (omitting subsidiary detail) and governmental activities at the government wide level. b. Assume that the General Fund uses the consumption method for reporting inventories of supplies rather than the purchases method. Make the required adjusting entries for the General Fund and governmental activities at the government-wide level.

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