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 $1,004,000 in bonds at face value to finance construction of a warehouse.

2. A $1.04 million contract is signed for construction of the warehouse. The commitment is required if allowed.

3. A $149,000 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 $18,230. When it was ordered, an anticipated cost of $17,600 had been recorded.

5. Supplies to be used in the schools are bought for $4,500 cash. The consumption method is used.

6. A state grant of $98,500 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.

7. Property tax assessments are mailed to citizens of the government. The total assessment is $736,000, although officials anticipate that 3 percent will never be collected. There is an enforceable legal claim for this money and the government can use it immediately.

a.Prepare journal entries for a local government funds to record the fund financial statements.

b.Prepare journal entries for a local government funds to record the government-wide financial statements

Answer 1

Local Government Fund Financial Statements Government Wide Financial Statements Debit in $ Credit in $ Journal Enteries Trans. Particulars Capital Projects Fund Cash a/c To Other Financing Sources - Bonds Proceeds Journal Enteries Trans. Particulars a. Cash a/c To Bonds Payable Dr. Debit in $ Credit in $ 1004000 1004000 Dr. 1004000 1004000 b. No Journal Entry Required b. Capital Projects Fund Encumbrances a/c Dr. To Fund Balance - Reserved for Encumbrances 1040000 1040000 No Journal Entry Required 18230 General Fund Other Financing Uses - Transfers Out a/c To Cash Machinery and Equipment a/c Dr. To Vouchers or Accounts Payable Dr. 149000 18230 149000 Dr. 4500 Inventory of Supplies a/c To Cash 4500 Debt Service Fund Cash a/c Dr. To Other Financing Sources - Transfers In 149000 149000 f. 98500 Cash a/c Dr. To Deferred Revenues 98500 General Fund Fund Balance - Reserved for Encumbrances a/c Dr. To Encumbrances 17600 g. 736000 17600 Taxes Receivable a/c Dr. To Revenues - Property Taxes To Allowance for Uncollectible Current Taxes 713920 22080 18230 Expenditures Control - Machinery and Equipment a/c Dr. To Vouchers Payable 18230 e. General Fund Inventory of Supplies a/c To Cash 4500 4500 f. Special Revenue Fund Cash a/c Dr. To Deferred Revenues 98500 98500 g. Dr. 736000 General Fund Taxes Receivable a/c To Revenues - Property Taxes To Allowance for Uncollectible Current Taxes 738000 x 3% = 22080 713920 22080