Preparing journal entries for transactions
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Chapter 12
The City of Wetteville has a fiscal year ending June 30. Examine the following transactions for Wetteville:
(A) On 6/1/10, Wetteville enters into a 5-year lease on a copying machine. The lease meets the criteria of a capital lease and carries an implied interest rate of 10%. The copier has a present value of $2,300. Wetteville has to put a $300 down payment on the lease at the beginning of the lease with monthly payments thereafter of $42.49.
(B) On 6/5/10, Wetteville opens a new landfill. The engineers estimate that at the end of 10 years the landfill will be full. Estimated costs to close the landfill are currently at $3,500,000.
(C) On 6/15/08, the end of the two-week pay period, Wetteville has $20,000 in accrued vacation pay related to the payroll for the period. The city estimates that $5,000 of this pay will be taken by the end of this summer and the rest will be used next summer.
(D) On 6/18/08, Wetteville receives a donation of a vintage railroad steam engine. The engine
will be put on display at the local town park. A fee will be charged to actually climb up into the engine. The engine has been valued at $500,000.
(E) On 6/30/08, Wetteville makes its first payment on the leased copier. The $42.49 payment includes $16.68 interest.
(F) On 6/30/08, Wetteville estimates that the landfill is 2% filled.
Required:
Prepare the journal entries for the above transactions, on the dates mentioned for each lettered item, for the purposes of preparing the government-wide financial statements.
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Solution Summary
This solution provides a complete computation of the given accounting problems in Excel format.
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