Question

(i) Nizwa city collected taxes amounting to OMR 10.00 million. These taxes are unrestricted.

(ii) Nizwa city received a state grant of OMR 0.5 Million for the purchase of garbage carrier trucks. This state grant was restricted for this specific purpose. The city spent 0.3 million for purchase of trucks.

(iii)Nizwa city issued OMR 20.00 Million municipal bonds for a construction of water drainage system. In that OMR 15.00 Million was actually spent for that project.

(iv) Nizwa city incurred OMR 8.00 Million in general operating expenditure of which it actually paid OMR 7.2 Million.

(v) The municipality transferred OMR 1.5 million from the general fund to the debt service fund to make the first payments of both principal and interest that are due in the following year.

You are required to:
(a) Give the accounting entries for each of the above transactions  
(b) Prepare the Statement of Fund Revenues, Expenditures and Other Changes in Fund Balances and; (c) The Fund Balance Sheet.   

Answer 1

Accounting Entries:

No.	Accounts Title	Debit	Credit
(i)	Cash	10,000,000
	Taxes Collected		10,000,000
(ii)	Cash	500,000
	Restricted Grant - For trucks		500,000
	Restricted Grant - For Truck	300,000
	Cash		300,000
(iii)	Water drainage system	15,000,000
	Cash	5,000,000
	Bonds payable		20,000,000
(iv)	General Expenditure	8,000,000
	Cash		7,200,000
	Expenditure payable		800,000
(v)	Debt Service Fund	1,500,000
	General Fund		1,500,000

Statement of Fund Revenues, Expenditures and Other Changes in Fund Balances

Statement of Fund Revenues, Expenditures and Other Changes in Fund Balances
Revenue:
Taxes	10,000,000
Expenditure:
General Expenditure	8,000,000
Excess of revenue over expenditure	2,000,000
Less: Debt reserve	1,500,000
General Reserve	500,000
The Fund Balance Sheet
Assets:
Cash	8,000,000
Water Drainane System	15,000,000
	23,000,000
Liabilities
Municipal Bonds	20,000,000
Expenditure payable	800,000
Special Grant - Truck	200,000
Debt Reserve	1,500,000
General Reserve	500,000
	23,000,000
Cash account (Working Note)
Amount Received
Taxes Collected	10,000,000
Bonds Issued	20,000,000
Special Grant	500,000	30,500,000
Amount Paid
Truck Purchase	300,000
Expenditure for Drainage	15,000,000
General Expenditure paid	7,200,000	22,500,000
Cash Balance		8,000,000