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 $1,016,000 in bonds at face value to finance construction of a warehouse.

2. A $1.03 million contract is signed for construction of the warehouse. The commitment is required if allowed.

3. A $156,000 transfer of unrestricted funds was made for the eventual payment of the debt in (a).

4. Equipment for the fire department is received with a cost of $18,985. When it was ordered, an anticipated cost of $18,400 had been recorded.

5. Supplies to be used in the schools are bought for $3,600 cash. The consumption method is used.

6. A state grant of $94,250 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.

7. Property tax assessments are mailed to citizens of the government. The total assessment is $634,000, although officials anticipate that 2 percent will never be collected. There is an enforceable legal claim for this money and the government can use it immediately.

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 $1,066,000 in bonds at face value to finance construction of a warehouse.

2. A $1.30 million contract is signed for construction of the warehouse. The commitment is required if allowed.

3. A $218,000 transfer of unrestricted funds was made for the eventual payment of the debt in (a).

4. Equipment for the fire department is received with a cost of $19,195. When it was ordered, an anticipated cost of $18,800 had been recorded.

5. Supplies to be used in the schools are bought for $4,250 cash. The consumption method is used.

6. A state grant of $103,000 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.

7. Property tax assessments are mailed to citizens of the government. The total assessment is $640,000, although officials anticipate that 2 percent will never be collected. There is an enforceable legal claim for this money and the government can use it immediately.

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 $992,000 in bonds at face value to finance construction of a warehouse.

2. A $1.14 million contract is signed for construction of the warehouse. The commitment is required if allowed.

3. A $164,000 transfer of unrestricted funds was made for the eventual payment of the debt in (a).

4. Equipment for the fire department is received with a cost of $15,240. When it was ordered, an anticipated cost of $14,600 had been recorded.

5. Supplies to be used in the schools are bought for $4,200 cash. The consumption method is used.

6. A state grant of $109,250 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.

7. Property tax assessments are mailed to citizens of the government. The total assessment is $648,000, although officials anticipate that 4 percent will never be collected. There is an enforceable legal claim for this money and the government can use it immediately.

"Vehicles are prohibited on the paths in the park" is used as an example of a law that might require clarification.

Decide whether the law should be interpreted to forbid motorcycles, bicycles, children's pedal cars, and battery-powered remote-control cars. On what grounds are you deciding each of these cases?

(b) During the year ended 30 June Year 6, Nungua Ltd acquired freehold land at a cost of
GHC 500,000 and built a distribution centre on it, using a mixture of subcontract and own
labour. The distribution centre cost a total of GHC 200,000 to construct. The construction was
completed by the end of April.

Required:

Set out the audit objectives in respect of the above and the substantive procedures you would
carry out to achieve those objectives.

The Little Theatre is a nonprofit organization devoted to staging plays for children. The theater has a very small full-time professional administrative staff. Through a special arrangement with the actors’ union, actors and directors rehearse without pay and are paid only for actual performances.

The Little Theatre had tentatively planned to put on five different productions with a total of 50 performances. For example, one of the productions was Peter Rabbit, which had a five-week run with three performances on each weekend. The costs from the current year’s planning budget appear below.

Some of the costs vary with the number of productions, some with the number of performances, and some are fixed and depend on neither the number of productions nor the number of performances. The costs of scenery, costumes, props, and publicity vary with the number of productions. It doesn’t make any difference how many times Peter Rabbit is performed, the cost of the scenery is the same. Likewise, the cost of publicizing a play with posters and radio commercials is the same whether there are 10, 20, or 30 performances of the play. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers vary with the number of performances. The greater the number of performances, the higher the wage costs will be. Similarly, the costs of renting the hall and printing the programs will vary with the number of performances. Administrative expenses are more difficult to pin down, but the best estimate is that approximately 65% of the budgeted costs are fixed, 20% depend on the number of productions staged, and the remaining 15% depend on the number of performances.

After the beginning of the year, the board of directors of the theater authorized expanding the theater’s program to four productions and a total of 54 performances. Not surprisingly, actual costs were considerably higher than the costs from the planning budget. (Grants from donors and ticket sales were also correspondingly higher, but are not shown here.) Data concerning the actual costs appear below:

Required:

1. Prepare a flexible budget performance report for the year that shows both spending variances and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)