1. Encumbrances: The city orders a fire truck estimated to cost $140,000. The fi
ID: 2376450 • Letter: 1
Question
1. Encumbrances:
The city orders a fire truck estimated to cost $140,000. The fire truck arrives with an invoice of $138,000. A voucher is processed and paid 2 weeks later. Record the journal entries for these transactions.
2. Journal Entries
Record the following transactions:
a. The city orders a police car estimated to cost $22,000
b. The police car arrives with an invoice of $25,000. The invoice is process for payment.
c. The invoice is paid.
d. The police car is destroyed in a crash and is sold for scrap of $1000.
Explanation / Answer
1. Encumbrances:
The city orders a fire truck estimated to cost $140,000. The fire truck arrives with an invoice of $138,000. A voucher is processed and paid 2 weeks later. Record the journal entries for these transactions.
When order place : No entry
When fire truck arrives with an invoice of $138,000
Fire Truck A/c Dr $138000
To Account Payable $138000
A voucher is processed and paid 2 weeks later.
Account payable A/c Dr $138000
To cash $138000
2. Journal Entries
Record the following transactions:
a. The city orders a police car estimated to cost $22,000
No entry
b. The police car arrives with an invoice of $25,000. The invoice is process for payment.
Police Car A/c $25000
To Account Payable $25000
c. The invoice is paid.
Account payable A/c Dr $25000
To cash $25000
d. The police car is destroyed in a crash and is sold for scrap of $1000.
Cash A/c Dr $1000
Loss on crash Dr $24000
To police Car $25000
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