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County of Maxnell: Sanitation Department Journal Entries

See attached file.

The County of Maxnell decides to create a sanitation department and offer its services to the public for a fee. As a
result, county officials plan to account for this activity within the enterprise funds. Make Journal entries for this
operation for the following 2008 transactions as well as necessary adjusting entries at the end of the year. Assume
that the information is being gathered for fund-based financial statements. Only entries for the sanitation department
are required here:

Jan 1- Received unrestricted funds for $90,000 as a transfer from the General Fund as permanent financing.

Feb 1- Borrowed an additional $130,000 from a local bank at a 12 percent annual interest rate.

March 1- Ordered a truck at an expected cost of $108,000

April 1- Received the truck and made full payment. The actual cost amounted to $110,000. The truck has a 10 year life and no salvage value.
Straight-line depreciation is to be used.

May 1- Received a $20,000 cash grant from the state to help supplement the pay of the sanitation workers. The money must be used for the purpose

June 1- Rented a garage for the truck at a cost of $1,000 per month and paid 12 months of rent in advance.

July 1- Charged citizens $13,000 for services. Of this amount, $11,000 had been collected.

August 1- Made a $10,000 cash payment on the 12 percent note of February 1. This payment covers both interest and principal.

September 1- Paid salaries of $18,000 using the grant received on May 1.

October 1- Paid Truck maintenance cost of $1,000

November 1- Paid additional salaries of $10,000 first using the rest of the grant money received May 1,

December 1- Sent invoices totaling $19,000 to customers for services over the past six months. Collected $3,000 cash immediately.


Solution Summary

This solution assists with journal entries for the sanitation department.