In: Accounting
Part A:
Rainbow City had the following transactions during the year.
Required: Prepare the necessary journal entries in the appropriate governmental fund general journal and the government-wide governmental activities general journal for each of the following Rainbow City transactions.
Part B:
In the current year, the building occupied by Surf Beach City’s Culture and Recreation Department suffered severe structural damage as a result of a hurricane. It had been 48 years since a hurricane had hit the Rainbow City area, although hurricanes in Rainbow City’s geographic area are not uncommon. The building had been purchased 10 years earlier at a cost of $2,000,000 and had accumulated depreciation of $500,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the impairment loss at $230,000; however, the city expects during the next fiscal year to receive insurance recoveries of $120,000 for the damage.
Requirements:
Journal entries in the books of RAINBOW CITY
S,NO | CATEGORY | PARTICULARS | DEBIT | CREDIT | |
1 | GENERAL FUND | NO ENTRY | |||
GOVERNMENT ACTIVITIES |
LAND A/C Dr |
4800000 | |||
TO PARKS AND RECREATIONS DONATION A/C (BEING DONATION RECEIVED FOR PARKS AND RECREATION DEVELOPMENT) |
4800000 | ||||
2 |
|
CASH A/C Dr | 5000 | ||
TO ASSET A/C (BEING MACHINERY SOLD) |
5000 | ||||
GOVERNMENT ACTIVITIES |
ACCUMULATED DEPRECIATION A/C Dr |
28700 | |||
CASH A/C Dr | 5000 | ||||
LOSS ON SALE A/C Dr | 1400 | ||||
TO MACHINERY A/C (BEING MACHINERY SOLD AT LOSS) |
35100 | ||||
3 | GENERAL FUND | LEASE PAYMENT A/C Dr | 24800 | ||
TO LEASE AGGREMENTS A/C | 24000 | ||||
TO CASH A/C (BEING LEASE PAYMENT FOR CAR MADE) |
800 | ||||
GOVERNMENT ACTIVITIES | LEASED ASSET A/C Dr | 24800 | |||
TO LEASE PAYABLE | 24000 | ||||
TO CASH (BEING LEASE PAYMENT FOR CAR MADE) |
800 | ||||
4 A | GENERAL FUND | CASH A/C Dr | 720000 | ||
TO REVENUE A/C (BEING FUNDS RECEIVED FOR THE PUBLIC SAFETY BUILDING) |
720000 | ||||
4 B | CONSTRUCTION EXPENSES A/C Dr | 1176000 | |||
TO CASH A/C (BEING CURRENT YEAR EXPENDITURE FOR PUBLIC SAFETY BUILDING RECORDED) |
1176000 | ||||
4 a | GOVERNMENT ACTIVITIES | CASH A/C Dr | 720000 | ||
TO PUBLIC SAFETY GRANTS A/C (BEING FUNDS RECEIVED FOR PUBLIC SAFETY BUILDING) |
720000 | ||||
4b | CONSTRUCTION WIP A/C Dr | 1176000 | |||
TO CASH A/C (BEING CURRENT YEAR EXPENSES FOR BUILDING MADE) |
1176000 | ||||
4c | BUILDINGS A/C Dr | 9720000 | |||
TO CONSTRUCTION WIP A/C (BEING WIP TRANSFERED TO CAPITAL ASSET) |
9720000 | ||||