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In: Accounting

Prepare journal entries for a local government to record the following transactions, first for fund financial...

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

a. The government sells $1,064,000 in bonds at face value to finance construction of a warehouse.

b. A $1.22 million contract is signed for construction of the warehouse. The commitment is required if allowed.

c. A $222,000 transfer of unrestricted funds was made for the eventual payment of the debt in (a).

d. Equipment for the fire department is received with a cost of $18,905. When it was ordered, an anticipated cost of $18,200 had been recorded.

e. Supplies to be used in the schools are bought for $4,550 cash. The consumption method is used.

f. A state grant of $93,500 is awarded to supplement police salaries. The money will be paid to reimburse the government after the supplement payments have been made to the police officers.

g. Property tax assessments are mailed to citizens of the government. The total assessment is $602,000, although officials anticipate that 5 percent will never be collected. There is an enforceable legal claim for this money and the government can use it immediately.

Also, mention the type of fund activity it is in front of the journal.

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Expert Solution

Answer:

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

a. The government sells $1,064,000 in bonds at face value to finance construction of a warehouse.

Here we are using Capital projects fund

Fund financial statements :

Particulars Debit($) Credit($)
Cash 1,064,000
Other financing sources-Bond proceeds 1,064,000

Government wide financial statements

Particulars Debit($) Credit($)
Cash 1,064,000
Bonds payable 1,064,000

Here, the assets are not reported only given the money financial the project.

b) b. A $1.22 million contract is signed for construction of the warehouse. The commitment is required if allowed.

Here we are using Capital projects fund

Fund financial statements :

Particulars Debit($) Credit($)
Encumbrance 1,220,000
Fund balance-Reserved for encumbrance 1,220,000

Government wide financial statements

Here no government activity is required under government wide financial statements.

c. A $222,000 transfer of unrestricted funds was made for the eventual payment of the debt

Fund financial statements :

Particulars Debit($) Credit($)
Other financing uses-Transfer out 222,000
Cash 222,000
Cash 220,000
Other financing uses-Transfer out 220,000

Government wide financial statements

In goverment activities, No entry is required to be recorded

d. Equipment for the fire department is received with a cost of $18,905. When it was ordered, an anticipated cost of $18,200 had been recorded.

Fund financial statements :

Particulars Debit($) Credit($)
Fund balance-reserved for encumbrances 18,200
Encumbrances 18,200
Expenditure control 18,905
Vouchers payable 18,905

Government wide financial statements

Particulars Debit($) Credit($)
Machinery and equipment 18,905
Vouchers payable 18,905

e) Supplies to be used in the schools are bought for $4,550 cash. The consumption method is used.

Fund financial statements :

Particulars Debit($) Credit($)
Supply inventory 4,550
Cash 4,550

Government wide financial statements

Particulars Debit($) Credit($)
Supply inventory 4,550
Cash 4,550

g) Property tax assessments are mailed to citizens of the government. The total assessment is $602,000, although officials anticipate that 5 percent will never be collected. There is an enforceable legal claim for this money and the government can use it immediately.

Uncollected tax = 602,000 *5% = $30,100

The amount of revenue = 602,000-30,100 = $571,900

Fund financial statements :

Particulars Debit($) Credit($)
Taxes receivable 602,000
Revenues 571,900
Uncollected property tax 30,100

Government wide financial statements

Particulars Debit($) Credit($)
Taxes receivable 602,000
Revenues 571,900
Uncollected property tax 30,100

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