How would I make these journal entries for nonprofit accounting? 1. There is a special revenue...

How would I make these journal entries for nonprofit accounting?

1. There is a special revenue fund and it makes an interfund transfer to a capital projects fund for $40,000. I think there are supposed to be 2 journal entries, one for each fund right?

2. A little county received a grant from the government for capital projects fund. I think I debit cash and credit other financing sources- intergovt funds?

3. We (the small county) are issued a long term bond. The bond proceeds are for construction, and my premium and interest will be for debt.

-premium of $600

-Face value of $10,000

- interest rate of 3%

For 3, I think one of my accounts would be to debit interest expenditures?

Please help me make journal entries for these, my professor said these could be possible test questions and I need to know them. Thank you!

Expert Solution


1	Journal entry for interfund transfer of funds from Special revenue fund to Capital projects fund

A	Journal Entry:

	Debit: Special Revenue Fund $40,000
	Credit: Capital Projects Fund $40,000

2	Grant received from the government for capital projects fund

A	Journal Entry:
	(i) While receiving the Government grant
	Debit: Cash/Bank $xxxxx
	Credit: Other Financial Sources $xxxxx

	(ii) While transfering the funds to Capital Projects Fund
	Debit: Other Financial Sources $xxxxx
	Credit: Capital Projects Fund $xxxxx

	Note: Since it is a grant received for Capital Projects Fund, Capital Projects Fund account shall be credited

	Alternatively, the following entry could be recorded since the net impact of above two entries is below

	Journal Entry:
	Debit: Cash/Bank $xxxxx
	Credit: Other Financial Sources $xxxxx

3	Issued a long term bond. The bond proceeds are for construction, and my premium and interest will be for debt.
	-premium of $600
	-Face value of $10,000
	- interest rate of 3%

A	Here, purpose for which the bond proceeds shall be utilized is not relevant as it is not a financial transaction. Hence, accounting entry shall be recorded only for issue of bonds.

	Journal Entry:
	Debit: Cash/Bank $10,600 [ Receipt = Face value + Premium]
	Credit: Bonds $10,000 [ Face value of the bond ]
	Credit: Premium on bonds $600 [ Premium on the bond ]

	Note:
	1. Interest on bonds shall be accounted as and when it is accrued
	2. Premium on bonds comes under retained earnings

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