Question

For the following prepare all necessary journal entries for the current year (except closing) for both the fund-based (designate the fund) and government-wide (designate the activity) financial statements. Use the letter of each transaction and YE for related year-end transactions to date the journal entries.

The Hamlet of Oakridge, which is run by a Council, began 2017 with a General Fund, which had two activities (education and conservation), and an Enterprise Fund, which provides water to the citizens. Oakridge has one school which cost $1,050,000 and has a 20-year life with no salvage value. The water plant cost $618,000 and has a 30-year life with no salvage value. Assume the Oakridge’s fiscal year follows the calendar year. The Council:

a. Decided to build conservation preserve and transferred $73,500 to a capital projects fund, and immediately expended $50,250 for a piece of land.

b. Borrowed $115,500 cash on a long-term bond issue for use in creating the new conservation preserve.

c. Assessed property taxes on the first day of the year. The assessment, which is immediately enforceable, totals $630,000. Of this amount, $535,500 will be collected during 2017 and another $52,500 is expected in the first two months of 2018; 1.25% is considered uncollectible. The remainder is expected to be collected halfway through 2018.

d. Constructed a building in the new conservation preserve for $189,990 cash for use as a nature conservatory. It was put into service on July 1 and should last 15 years with no salvage value.

e. Built a hiking trail through the new conservation preserve for $10,500 cash and put it into service on July 1. It should last for 10 years, but the Council plans to add the trail to its asset network and keep it up to a pre-determined quality level so that it will last almost indefinitely.

f. Opened the preserve and charged an entrance fee of only a token amount, which goes to support general operations. Collections in the first year total $25,000.

g. Built a new water tower for $195,000, paying $20,000 cash and signing a long-term note for the balance. The water tower, which went into operations on July 1, provides additional storage for Oakridge Water Works and is considered part of that function. It has a 20-year life and no salvage value.

h. Received a $95,000 cash grant for the Oakridge school that must be spent for a school breakfast program for under-privileged children. Appropriate spending of these funds is viewed as an eligibility requirement for this grant (reimbursement grant). During the current year, $35,150 of the amount received was properly spent.

i. Bought school supplies for $22,660 cash and uses $17,510 of them. The Council uses the purchases method for all supplies.

j. Received a sculpture by a local artist to be displayed in the lobby of the nature conservatory. It qualifies as a work of art, and the Council has chosen not to capitalize it. The painting has a value of $82,500. It is viewed as inexhaustible.

k. Ordered a new school bus for $101,970.

l. Received the school bus and paid an actual cost of $104,006. The bus was put into operation on October 1 and should last for five years with no salvage value.

m. Paid salaries of $252,000 to schoolteachers. In addition, owes and will pay $31,500 during the first two weeks of 2018. Vacations worth $24,150 have also been earned but will not be taken until July 2018.

n. Paid salaries of $43,260 to staff at the Water Works. In addition, owes and will pay $3,090 in the first two weeks of 2018. Vacations worth $5,150 have also been earned but will not be taken until the summer of 2018.

o. Charged various customers $133,900 for water services provided. Of this balance, $113,300 was collected in cash and the remainder will be collected in April 2018.

p. Paid $9,270 in maintenance charges for the conservatory and trail.

q. Paid $15,000 on the conservation preserve bonds; $10,395 is interest.

r. Accrued interest of $13,390 on the water tower note; it will be paid in June 2018.

s. Opened a landfill that is estimated to be 12% full at year-end. It is estimated that closure costs will be $824,000. The Council made a $20,600 advance payment toward those closure costs.

t. Signed a five-year capital lease at the beginning of the year on equipment that will be used by the school. The first $22,000 payment was made at signing, with the remaining payments to be made at year-end for the term of the lease. The present value of the minimum lease payments is $87,800, based on an interest rate of 8%.

Answer 1

	Journal Enries
		Dr.	Cr.
YE	Depreciation- school (1050000/20)	$     52,500
	Accumulated Dep. - School		$     52,500
YE	Depreciation water Plant (618000/30)	$     20,600
	Accumulated Dep. - Water Plant		$     20,600
a.	General Fund	$     73,500
	Capital project Fund		$     73,500
a.	Capital Work in Progress	$     50,250
	Cash		$     50,250
b.	Cash	$ 1,15,500
	Long term bond		$ 1,15,500
c.	Property Tax Receivable	$ 6,30,000
	Property tax revenue		$ 6,30,000
c.	Cash	$ 5,35,000
	Property Tax Receivable		$ 5,35,000
c.	Bad Debts (630000 x 1.25%)	$       7,875
	Property Tax Receivable		$       7,875
d.	Building	$ 1,89,990
	cash		$ 1,89,990
YE	Depreciation - Building (189990/15)	$     12,666
	Accum. Depn. - Building		$     12,666
e	Conservation Preserve	$     10,500
	cash		$     10,500
f	Cash	$     25,000
	Entrance fee		$     25,000
g	Water tower	$ 1,95,000
	Cash		$     20,000
	Long term note		$ 1,75,000
YE	Depreciation - Water tower	$       9,750
	Accum.Depn.- water tower		$       9,750
h	Cash	$     95,000
	Reimbursement Grant		$     95,000
h	Reimbursement Grant	$     35,150
	Cash		$     35,150
i.	Supplies	$     22,660
	Cash		$     22,660
i.	Supplies Expended	$     17,510
	Supplies		$     17,510
J.	No entry to be passed
k	No entry to be passed
l	School Bus	$ 1,04,006
	Cash		$ 1,04,006
YE	Depreciation- School bus	$     20,801
	Accum. Depn. - School bus		$     20,801
m	Salaries - teachers	$ 2,52,000
	Cash		$ 2,52,000
YE	Salaries - teachers	$     31,500
	Salary Payable -teachers		$     31,500
YE	Vacation - teachers	$     24,150
	vacaion payable- teachers		$     24,150
n	Salary- water work	$     43,260
	Cash		$     43,260
YE	Salary- water work	$       3,090
	Salary Payable - water work		$       3,090
YE	Vacation - water work	$       5,150
	vacaion payable - water work		$       5,150
o	Water Service Charges Receivable	$ 1,33,900
	Water Servce Charges		$ 1,33,900
o	Cash	$ 1,13,300
	Water Service Charges Receivable		$ 1,13,300
p	Maintenance Charges	$       9,270
	Cash		$       9,270
q	Interest	$     10,395
	Conservation Preserve Bond	$       4,605
	Cash		$     15,000
r YE	Interest	$     13,390
	Accrued Ineterst		$     13,390
s	Advance Payment - Closure Cost	$     20,600
	Cash		$     20,600
t	Lease Payment	$     22,000
	Cash		$     22,000
YE	Lease Payment	$     87,800
	Lease Payable		$     87,800