Question 1: Saudi Arabia uses a Special Revenue Fund, an Enterprise Fund and a General Fund. The Special Revenue Fund is financed by a grant from the central provinces to provide care for the elderly. The Enterprise Fund provides bus service both to the public and to government agencies. Prepare entries to record these transactions. Identify the funds involved in each case.
A. The Enterprise Fund bills the Special Revenue Fund SAR35,500 for bus service provided to the elderly.
B. The General Fund receives an electricity bill for SAR 22,000 and prepares a voucher to pay the bill. The General Fund then bills the Special Revenue Fund for SAR3,900, representing the portion of the electricity bill applicable to the senior citizens building.
C.The Enterprise Fund is short of cash to pay its bills. The General Fund lends the Enterprise Fund SAR 55,000 in cash, which will be repaid before the end of the year.
D. The General Fund pays cash of SAR109,000 to the Enterprise Fund as a subsidy to help meet the operating costs of the Enterprise Fund.
Question 2: General Fund of the City of Mineral Wells shows $35,000 in supplies inventory on January 1, 2016. During the year 2016, General Fund cash is used to purchase $120,000 of supplies. On December 31, 2016, the city conducts an inventory count and finds $50,000 of supplies inventory remains. Using the purchases method of accounting for inventory, prepare the journal entries necessary to record.
(a) Purchase of the inventory
(b) To make the year-end adjustment to inventory.