Nickamigo County is preparing financial statements for the fiscal year ended June 30, 2012. Based on the following facts, prepare journal entries to record the appropriate year- end expenditure accruals in the county’s General Fund. Also, state the accounting principle that justifies each journal entry.
1. The work week in Nickamigo County runs from Saturday through Friday. Its employees are paid 7 days after the end of the work week. For the work week ended Friday, June 29, 2012, the employees earned $ 580,000. Employees who worked Saturday, June 30, earned a total of $ 40,000.
2. A claim for $ 100,000 was filed against a county health clinic for medical malpractice in March 2012. The case is scheduled to go to trial in January 2013. County attorneys believe it is probable the county will lose the case if it goes to trial and thus will try to negotiate a settlement. They believe the claim can be settled for about $ 40,000.
3. The county pays health care benefits on behalf of its retired employees. Nickamigo’s actuary advised the county that if the plan were financed in accordance with actuarial standards, it would need to contribute $ 600,000 for fiscal year 2012 to its Retiree Health Care Trust Fund. Instead, the county makes monthly payments into the fund that are sufficient to pay the actual expenditures made on behalf of its retirees. The county paid $ 125,000 into the fund between July 1, 2011 and June 30, 2012, and will pay an additional $ 18,000 into the fund on July 10, 2012 for benefit claims made in June, 2012.

  • CreatedDecember 30, 2014
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