Question: At the beginning of 2012 the City of Fairview reported

At the beginning of 2012, the City of Fairview reported an Unreserved Fund Balance of $555,000 and a supplies inventory balance of $175,000. During the year, Fairview purchased $225,000 in supplies and used $220,000 worth. The city will report a reserve for supplies inventory.

A. Prepare the necessary journal entries under the purchases method.
B. Prepare the journal entries needed to account for the supplies under the consumption method.
C. What would the 12/31/12 balance in the Unreserved Fund Balance be under each method, assuming that the only transactions of the fund are those involving the supplies?

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  • CreatedMarch 16, 2015
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