Accounting for P r epayments and Capital Assets
Prepare journal entries for Iron City’s general fund for the following, including any adjusting and
closing entries on December 31, 20X1:
a. Acquired a three-year fire insurance policy for $5,400 on September 1, 20X1.
b . Ordered new furniture for the city council meeting room on September 17, 20X1, at an esti-
mated cost of $15,600. The furniture was delivered on October 1; its actual cost was $15,200,
its estimated life is 10 years, and it has no residual value.
c. Acquired supplies on November 4, 20X1, for $1,800. Iron City uses the consumption method of accounting. Supplies on hand on December 31, 20X1, were $1,120.