Question

Prepare journal entries for a local government to record the following transactions, first for fund financial statements and then for government-wide financial statements.

1. The government sells $1,098,000 in bonds at face value to finance the construction of a new warehouse.

2. A $1.18 million contract is signed for construction of the warehouse. The commitment is reported, if allowed.

3. The government transfers cash of $210,000 in unrestricted funds for the eventual payment of the debt in (a).

4. The government receives equipment for the fire department with a cost of $16,840. When ordered, an anticipated cost of $16,200 was recorded.

5. Supplies to be used in the schools are bought for $2,050 cash. The consumption method is used.

6. The state awards a grant of $113,000 to supplement police salaries. The money will be paid to reimburse the government but only after the supplement payments have been made.

7. The government mails property tax assessments to its citizens. The total assessment is $725,000, although officials anticipate that 4 percent will never be collected. The government holds an enforceable legal claim to this money. It can be spent immediately.

Prepare journal entries for a local government funds to record the fund financial statements. (Select the appropriate fund for each situation when required. Enter your answers in dollars, not in millions. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Prepare journal entries for a local government funds to record the government-wide financial statements. (Select the appropriate fund for each situation when required. Enter your answers in dollars, not in millions. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

	Fund Financial statements
Sr. no.	Account Titles and explanation	Debit($)	Credit($)
a	Cash	1098000
	To Other financing sources - Bonds proceeds		1098000
b	Encumbrances - Warehouse	1180000
	To Encumbrances - Outstanding		1180000
c	Other financing uses- Transfers out	210000
	To Cash		210000
	Cash	210000
	To Other financing sources - transfer in		210000
d	Encumbrances outstanding	16200
	To Encumbrances - Equipment		16200
	Expenditure control - Machinery & equipment	16840
	To Vouchers payable		16840
e	Inventory of supplies	2050
	To Cash		2050
f	Grant receivable	113000
	To Unavailable Grant revenue		113000
g	Taxes receivable	725000
	To Revenue - Property taxes		696000
	To Allowance for uncollectible current taxes		29000
	Government Wide financial statement
Sr. no.	Account Titles and explanation	Debit($)	Credit($)
a	Cash	1098000
	To Bonds payable		1098000
b	No entry
c	No entry
d	Machiner and equipment	16840
	To Vouchers or account payable		16840
e	Inventory of supplies	2050
	To Cash		2050
f	Grant receivable	113000
	To Unearned grant revenue		113000
g	Taxes receivables	725000
	To Revenue - property taxes		696000
	To Allowance for uncollectible current taxes		29000