On July 1, Gilbert County bought computer equipment for use in the administrative offices of the County.The equipment has an estimated useful life of three years and salvage of $10,000.Gilbert County has a 6/30 fiscal year-end.Assuming that the County maintains its books and records in a manner that facilitates the preparation of government-wide financial statements, the $85,000 cost of this equipment would require which of the following entries?
A)Debit Expenditures $85,000; Credit Cash $85,000.
B)Debit Equipment $85,000; Credit Cash $85,000.
C)Debit Expenses $85,000; Credit Cash $85,000.
D)No entry is required.

Question

Quizplus · Accepted Answer

Under the government-wide financial statements, the capital assets are considered as long-term assets, rather than expenses. Therefore, the cost of computer equipment is recorded as an asset, not an expenditure. The entry to record the purchase of computer equipment would be a Debit to Equipment for $85,000 and a Credit to Cash for $85,000.

On July 1, Gilbert County Bought Computer Equipment for Use