Question

In: Accounting

Indicate (i) how each of the following transactions impacts the fund balance of the general fund,...

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.

Solutions

Expert Solution

A. This will increase the available general fund balance as it for general operations. Corresponding liability of Public debt will be created for $ 6 Mn.

B. This will not affect general fund as it will be used from dedicated Public Service Fund. But will result in reduction in cash balance

C.The amount will be added to the General fund though it is received by Police and Fire departments but the work was done for multiple departments. Bank balance will increase.

D. Property taxes will be acrrued in the books of goverment but it wont affect the any fund balance during the current financials year as it will bed received within 4 months from close of the year.

E. This is specifi grant accordingly it will be added to the specific fund and accordingly cash balance will be increased. But till the stipulated condition is not fulfilled it will be credited to reserve account and will not be recongined as revenue.

F. Sales tax will be accrued as revenue but wont impact the fund balance as it wont be received in the current year.

G. Reduction in cash/bank balance but utilised from specific fund balance hence wont impact the general fund balance.

H. Reduction in General Fund but overall cash/bank balance will remain same.


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