Accounting for Prepayments and Capital Assets
Required
Prepare journal entries for Iron City’s general fund for the following, including any adjusting and closing entries on December 31, 20X1:
a. Acquired a three-year fire insurance policy for $5,400 on September 1, 20X1.
b. Ordered new furniture for the city council meeting room on September 17, 20X1, at an estimated cost of $15,600. The furniture was delivered on October 1; its actual cost was $15,200, its estimated life is 10 years, and it has no residual value.
c. Acquired supplies on November 4, 20X1, for $1,800. Iron City uses the consumption method of accounting. Supplies on hand on December 31, 20X1, were $1,120.