Question

Indicate (i) how each of the following transactions impacts the fund balance of the general fund, and its classifications, for fund financial statements and (ii) what impact each transaction has on the net position balance of the Government Activities on the government-wide financial statements.

a.Issue a 5-year bond for $6 million to finance general operations.

b.Pay cash of $149,000 for a truck to be used by the police department.

c.The fire department pays $17,000 to a government motor pool that services the vehicles of only the police and fire departments. Work was done on several department vehicles.

d.Levy property taxes of $75,000 for the current year that will not be collected until four months into the subsequent year.

e.Receive a grant for $7,000 that must be returned unless the money is spent according to the stipulations of the conveyance. That is expected to happen in the future.

f.Businesses make sales of $20 million during the current year. The government charges a 5 percent sales tax. Half of this amount is to be collected 10 days after the end of the current year with the remainder to be collected 14 weeks later. “Available” has been defined by this government as 75 days.

g.Order a computer for the school system at an anticipated cost of $23,000.

h.A cash transfer of $18,000 is approved from the general fund to a capital projects fund.

Answer 1

a.Issue a 5-year bond for $6 million to finance general operations.	Fund-based financial statements	It is the inflow of current financial resources because the fund balance increased by $6 million.
	Government-wide financial statements	Cash debited and Bonds Payable Credited.Both assets (cash) and liabilities (bonds payable) will increased by $6 million .The net asset balance does not change.
b.Pay cash of $149,000 for a truck to be used by the police department.	Fund-based financial statements	It is the outflow of current financial resources because the fund balance decreased by $6 million.
	Government-wide financial statements	Truck debited and Cash Credited.The net asset balance does not change as One asset (truck) will increase while a second asset (cash) will decrease.
c.The fire department pays $17,000 to a government motor pool that services the vehicles of only the police and fire departments. Work was done on several department vehicles.	Fund-based financial statements	It is the outflow of current financial resources because the fund balance decreased by $6 million for the General Fund by $17,000
	Government-wide financial statements	The net asset balance does not change
d.Levy property taxes of $75,000 for the current year that will not be collected until four months into the subsequent year.	Fund-based financial statements	The fund balance will not be affected as an asset (receivable) is recognized along with a liability (deferred revenue)
	Government-wide financial statements	The net asset balance will increase as $75,000 receivable is recognized
e.Receive a grant for $7,000 that must be returned unless the money is spent according to the stipulations of the conveyance. That is expected to happen in the future.	Fund-based financial statements	The fund balance will not be affected as an asset (cash) is recognized along with a liability (deferred revenue)
	Government-wide financial statements	The net asset balance does not change
f.Businesses make sales of $20 million during the current year. The government charges a 5 percent sales tax. Half of this amount is to be collected 10 days after the end of the current year with the remainder to be collected 14 weeks later. “Available” has been defined by this government as 75 days.	Fund-based financial statements	The fund balance would increased by ($20 x 5%) = $1million.The sale took place in the current year and the resources will be received within the 75 day period.
	Government-wide financial statements	The net asset balance will increase by $1 million because the sale was made in the current period
g.Order a computer for the school system at an anticipated cost of $23,000.	Fund-based financial statements	The fund balance will not be affected as an encumbrance may be recorded to avoid spending more than the appropriated amount
	Government-wide financial statements	The net asset balance does not change because its an order.
h.A cash transfer of $18,000 is approved from the general fund to a capital projects fund.	Fund-based financial statements	The fund balance would decreased by $18000 because the transfer has been approved and will reduced current financial resources
	Government-wide financial statements	The net asset balance does not change because this is an intra-activity transfer from one Governmental Fund to another.