In: Accounting
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.
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 |