The government placed orders for supplies. All supplies ordered during the year

Question

The government placed orders for supplies. All supplies ordered during the year were recieved (there are no outstanding encumbrances). The government uses the consumption method of recording supplies (expenditure is determined by the amount of supplies used - not the amount of supplies purchased - during the year.

950,000

900,000

I am having a hard time coming up with the corresponding journal entry that would be used to record this transaction for Governmental Accounting

General Operations Public Safety Education Total Supplied Ordered $940,000 Invoice Prices $410,000 $400,000 $140,000

950,000

Invocies Paid

900,000

Explanation / Answer

In the above it is given that expenditure is derermined by the amount of supplies used but Not on the amount of supplies purchased. This statement doesnot make any difference since all the supplies purchased have been already used. The journal entry in the above case will be as below.

Purchases for general operations a/c. $410000

Purchases for public safety a/c. $400000

Purchases for education a/c . $ 140000

To Bank a/c . $90000  

To trade payable a/c. $50000

(Being journal entry passed for recording of purchases)

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