Question

The City of Ben maintains its books and records in a manner that facilitates the preparation of fund financial statements. Prepare all necessary journal entries to record the city’s revenues from the following transactions for the year ended December 31, 2017.

address the questions listed below.

a.) On January 15, the city received notification that it had been awarded a $300,000 federal grant to assist in the operation of its   

     “Meals on Wheels” program. The federal government expects to send the cash in about three months. This is not a reimbursement type grant and all eligibility requirements have been met. In February the city spent $31,000 on “Meals on Wheels.”

     In April, the city received the $300,000 grant from the federal government.

b.) On March, fines of $1,800 were issued for parking tickets. Payment must be made within 30 days when the city has an

      enforceable legal claim to the amounts. In April, the city received $1,200 cash in payment of parking tickets issued in March. In

      addition, $100 of tickets was contested and court dates have been set. Also, the city expects another $100 of tickets will be uncollectible but the remaining amounts will be paid eventually.

c.)   Restaurant licenses are issued for a one-year period, from July 1 to June 30. The license fees are used to pay restaurant

        inspectors. In June, the city received $11,000 in restaurant license fees.

Licenses Revenue to be recognized at Year-End Governmental Fund Financial Statements is

		$11,000
		$5,500
		$2,000
		$0

Answer 1

1. When Grant Notification Received:

Grant Receivable        $3,00,000

    Revenue                   $3,00,000

2. Expenses Spent on Program:

Expenses             $ 31,000

   Cash/Bank        $ 31,000

3. Actual Receipt of Grant:

Cash/Bank                     $3,00,000

    Grant Receivable      $3,00,000

4. On Issue of Parking Ticket:

Receivable                    $ 1800

Deferred Revenue (Liability)    $ 1800

5. Confirmation of Revenue:

Deferred Revenue (Liability)                   $ 1700

   Revenue                               $ 1700

6. On Receipt of payment against tickets:

Cash/ Bank                                   $ 1200

   Receivable                                $ 1200

7. Provision for $ 100 doubtful tickets:

Provision for Doubtful debts        $100

Expenses                                  $ 100

8. On Issue of license:

Cash/Bank                    $11,000

Deferred Revenue (Liability)   $ 5500

Revenue                                  $ 5500

9. On payment of License Fees to inspectors:

Expenses                                $ 5500

Prepaid Expenses                   $ 5500

Cash/Bank                            $11,000

10. Since, license is issued for 1 year, only 50% revenue (20% of $ 11,000) $ 5500 upto Dec 31st can be recognized as revenue in books of accounts.