Author Question: At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was ... (Read 111 times)

humphriesbr@me.com · **on:** Jul 5, 2018

At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true?
a. Salary Expense for the year was understated.
b. The total of the liabilities at the end of the year was overstated.
c. Net income for the year was understated.
d. Owner's equity at the end of the year was understated.

Question 2

(Encumbrance journal entries)

The Town of Suarez had the following transactions.

1, Placed a purchase order in the amount of 12,000 for supplies.
2, Placed a purchase order with a car dealer to replace the town's only police car.

The expected cost of the car is 32,000
3, The police car was delivered to town officials with an invoice of 32,500 . The invoice was approved and paid.
4, Unfortunately, some of the supplies ordered (in 1) were backordered and could not be shipped. However, supplies that were expected to cost 8,000 were received along with an invoice of 7,900 . The invoice was paid when received.
5, The remaining supplies that were ordered (in 1) were received. The invoice in the amount of 4,000 was paid.

Required:

Prepare the general journal entries necessary to record the budget and operating transactions 1- 5

What will be an ideal response?

bob · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

a

Answer to Question 2

1, Encumbrancessupplie s 12,000
Budgetary fund balance reserved for encumbrances 12,000

2, Encumbrancespolice car 32,000
Budgetary fund balance reserved for encumbrances 32,000

3, Budgetary fund balance reserved for encumbrances 32,000
Encumbrancespolice car 32,000

Expenditurespolice car 32,500
Cash 32,500

4, Budgetary fund balance reserved for encumbrances 8,000
Encumbrancessupplie s 8,000

Expendituressupplie s 7,900
Cash 7,900

5, Budgetary fund balance reserved for encumbrances 4,000
Encumbrancessupplie s 4,000

Expendituressupplie s 4,000
Cash 4,000