Question

In: Accounting

The City of Lynnwood was recently incorporated and had the following transactions for the fiscal year...

The City of Lynnwood was recently incorporated and had the following transactions for the fiscal year ended December 31, 2017.
1.

The city council adopted a General Fund budget for the fiscal year. Revenues were estimated at $2,050,000 and appropriations were $1,995,000.

2.

Property taxes in the amount of $1,990,000 were levied. It is estimated that $11,500 of the taxes levied will be uncollectible.

3.

A General Fund transfer of $27,500 in cash and $305,000 in equipment (with accumulated depreciation of $70,000) was made to establish a central duplicating internal service fund.

4.

A citizen of Lynnwood donated marketable securities with a fair value of $850,000. The donated resources are to be maintained in perpetuity with the city using the revenue generated by the donation to finance an after school program for children, which is sponsored by the culture and recreation function. Revenue earned and received as of December 31, 2017, was $45,000.

5.

The city’s utility fund billed the city’s General Fund $130,000 for water and sewage services. As of December 31, the General Fund had paid $129,000 of the amount billed.

6. The central duplicating fund purchased $7,000 in supplies.
7. Cash collections recorded by the general government function during the year were as follows:
  Property taxes $ 1,930,000
  Licenses and permits 40,000
  User charges 30,500
8.

During the year the internal service fund billed the city’s general government function $18,200 for duplicating services and it billed the city’s utility fund $10,600 for services.

9.

The city council decided to build a city hall at an estimated cost of $5,050,000. To finance the construction, 4 percent bonds were sold at the face value of $5,050,000. A contract for $4,550,000 has been signed for the project; however no expenditures have been incurred as of December 31, 2017.

10.

The general government function issued a purchase order for $34,500 for computer equipment. When the equipment was received, a voucher for $32,400 was approved for payment and payment was made.

Using the funds you identified in part a, prepare journal entries to properly record each transaction for the fiscal year ended December 31, 2017. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Transaction Fund or Activity General Journal Debit Credit
1. The city council adopted a General Fund budget for the fiscal year. Revenues were estimated at $2,050,000 and appropriations were $1,995,000.
1 GF
2. Property taxes in the amount of $1,990,000 were levied. It is estimated that $11,500 of the taxes levied will be uncollectible.
2 GF
GA
3. A General Fund transfer of $27,500 in cash and $305,000 in equipment (with accumulated depreciation of $70,000) was made to establish a central duplicating internal service fund.
3 GF
ISF
4. A citizen of Lynnwood donated marketable securities with a fair value of $850,000. The donated resources are to be maintained in perpetuity with the city using the revenue generated by the donation to finance an after school program for children, which is sponsored by the culture and recreation function. Revenue earned and received as of December 31, 2017, was $45,000.
4a PF Record the donation of marketable securities.
4b Record the receipt of interest.
4c Record the transfer of interest.
4d SRF
4e GA Record the donation of marketable securities.
4f Record the receipt of interest.
5. The city’s utility fund billed the city’s General Fund $130,000 for water and sewage services. As of December 31, the General Fund had paid $129,000 of the amount billed.
5a EF Record the billings for services made by the utilities fund for water and sewage services
5b Record the amount received against billings for services.
5c GF Record the expenditure towards water and sewage services.
5d Record the payment against billings for services.
5e GA Record the expenditure towards water and sewage services.
5f Record the payment against billings for services.
6. The central duplicating fund purchased $7,000 in supplies.
6 ISF
GA
7. Cash collections recorded by the General Fund during the year were as follows: property taxes, $1,930,000; licenses and permits, $40,000; user charges, $30,500.
7 GF
GA
8. During the year the internal service fund billed the city’s general government function $18,200 for duplicating services and it billed the city’s utility fund $10,600 for services.
8 ISF
EF
GF
GA
9. The city council decided to build a city hall at an estimated cost of $5,050,000. To finance the construction, 4 percent bonds were sold at the face value of $5,050,000. A contract for $4,550,000 has been signed for the project; however no expenditures have been incurred as of December 31, 2017.
9a CPF Record the issues of bonds for the City Hall.
9b Record the contract the estimated expenditure towards the City Hall building contract.
9c GA
10. The general government function issued a purchase order for $34,500 for computer equipment. When the equipment was received, a voucher for $32,400 was approved for payment and payment was made.
10a GF Record the issues of purchase order.
10b Record the payment made towards purchase of computer.
10c GA

Solutions

Expert Solution

1. As it is general budget and the revenues are estimated figures there will not be any journal entry.

2.

Bank account debit 1978500
Bad debts account Debit 11500
Property Taxes Credit 1990000

3.

Internal Service Fund Debit 262000 (27000+305000-70000)
Accumulated Depreciation Debit 70000
Cash Credit 27000
Equipment Credit 305000

4.

Securities Debit 850000
Donations Credit 850000
Bank Debit 45000
Interest Received Credit 45000

5.

City General Fund Debit 130000
Water and Sewage Services Credit 130000
Bank Debit 129000
City General Fund Credit 129000

6.

Purchase Debit 7000
Bank Credit 7000

7.

Cash Debit 2000500
Property Taxes Credit 1930000
Licences and Permit Credit 40000
User Charges Credit 30500

8.

City's General Function Debit 18200
Duplicating Services Credit 18200
City's Utility fund Debit 10600
Services Credit 10600

9.

Bank Debit 5050000
4% Bonds Credit 5050000

10.

Equipment Debit 32400
Cash Credit 32400

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