In: Accounting
What is the solution to Chapter 8 problem 3 relating to Governmental and Nonprofit accounting
P8-3 (General Ledger Entries and Statements) Hatcher Village,
which operates on the calendar year, issued a 5-year, 8%, $100,000
note to the Bank of Hatcher on January 5, 20X4. The proceeds of the
note were recorded in a Capital Projects Fund. Interest and
one-tenth of the principal are due semiannually, on January 5 and
July 5, beginning July 5, 20X4. A DSF has been established to
service this debt; financing will come from General Fund transfers
and a small debt service tax approved several years ago. The net
assets of the fund at year end are not restricted or
committed.
Requireda. Prepare the general journal entries (budgetary and
actual) needed to record the following transactions and events. b.
Prepare a balance sheet at December 31, 20X4, and a Statement of
Revenues, Expenditures, and Changes in Fund Balance for the year
then ended for the DSF.
Jouranl Entries:-
Date: 5th January
1.) Bank A/c Dr. $1,00,000
To 8% Note(Debt) A/c $1,00,000
2.) Interest A/c Dr. $ 4,000 (1,00,000*8%*6/12)
8% Note(Debt) A/c Dr. $10,000 (1,00,000*10%)
To Bank A/c $ 14,,000
3.) Statement of Profit & Loss A/c Dr. $4,000
To interest A/c $4,000
Date: 31st December
4.) Interest A/c Dr. $ 3,889 (1,00,000*8%*175/360)
To Interest Payable A/c $ 3,889
5.) Statement of Profit & Loss A/c Dr. $ 3,889
To interest A/c $ 3,889
Statement of Revenue A/c:-
Interest Expense Dueing the Year = $ 7,889 (4,000+3,889)
Balance Sheet Position:-
8% Note (Debt) = $ 90,000 (1,00,000-10,000)
Interest Payable = $3,889
Bank Balance $ 86,000 (1,00,000-14,000)