Question

Required: Part A. What is the worksheet entry required to adjust beginning (or Position in the 12/31/2017 government-wide financial statements for long term debt? Part B. What are the worksheet entries to adjust for current year activity in long- debt for the year ended 12/31/2017? Assume interest for the year is due on 12/31 and the bond premium is amortized on the straight line basis. 5. The City of Thomasville maintains its books so as to prepare fund accounting statements and prepares worksheet adjustments in order to prepare government- wide financial statements. Required: You are to prepare, in journal form, worksheet adjustments for each of the following situations. 1. General fixed assets, as of the beginning of the year, which had not been record were as follows: $ 60,000,000 547 099.000 Tand

Answer 1

1. Recording the assets into books of accounts not recorded earlier:

Journal Entry:

Land a/c Dr.           $ 60,000,000

Building a/c Dr.     $ 542,000,000

Improvement other than Building a/c Dr. $ 245,000,000

Equipment a/c Dr. $ 85,000,000

     To Cash a/c $ 932,000,000

(Being assets purchased not recorded)

Depreciation a/c Dr. $ 248,400,000

   To accumulated depreciation Capital Assets a/c     $ 248,000,000

(Since the date of purchase of opening assets is not given, depreciation cannot be allocated to respective assets)

2. Recording the capital expenditure:

Journal Entry:

Building a/c Dr. $ 10,717,520

Improvement other than building a/c Dr. $ 1,756,230

Land a/c Dr. $ 351,250

     To cash a/c $ 12,825,000

(It is assumed that the interest is capitalized for the spending made on capital outlays and hence it is distributed in the ratio of spending and added to the amount of asset)

3. Recording of depreciation for the current year

Journal Entry:

Depreciation a/c Dr. $ 20,565,000

To accumulated depreciation Building a/c $ 10,840,000

To accumulated depreciation Improvement other than building a/c $ 1,225,000

To accumulated depreciation Equipment a/c $ 8,500,000

(Depreciation is charged on the SLM basis i.e.,{ total amount / No. of years of useful life})

4. Recording of sale of asset in current year

Journal Entry:

Cash or Bank a/c Dr. $ 25,000

Accumulated Depreciation a/c Dr. $ 60,000

Loss on sale of Equipment a/c Dr. $ 25,000 (Balancing Figure)

   To Equipment a/c $ 110,000

(At the time of sale of asset, accumulated depreciation is adjusted and difference in the net cost of asset and amount received is treated as profit/ (loss))