Connect Access Card for Financial Accounting: Information and Decisions
8th Edition
ISBN: 9781259662966
Author: John J Wild
Publisher: McGraw-Hill Education
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The voters of Salinas City authorized the construction of a new north-south expressway for a total cost of no more that $90 million. The voters also approved the issuance of $60 million of 5 percent general obligation bonds. The balance of the necessary funds will come from the following sources: $20 million from a federal grant and $10 million from a state grant. The city controls expenditures in capital project funds through project management. The city does not formally incorporate budgetary entries in the capital projects fund but it does use encumbrance accounting for control purposes.
Assume that the city maintains its books and records in a manner that facilitates the preparation of the fund financial statements. Prepare journal entries in the capital projects fund, for the following transactions. The city
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(b) Transfers the premium to the appropriate fund.
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The City of Bagranoff holds $90,000 in cash that will be used to make a bond payment when the debt comes due early next year. The assistant treasurer had made that decision. However, just before the end of the current year, the city council formally approved using this money in this way. The city council has been designated as the highest level of decision-making authority for this government. What impact does the council’s action have on the reporting of fund financial statements?
Fund balance—unassigned goes down and fund balance—restricted goes up.
Fund balance—assigned goes down and fund balance—committed goes up.
Fund balance—unassigned goes down and fund balance—assigned goes up.
Fund balance—assigned goes down and fund balance—restricted goes up.
Chapter 10 Solutions
Connect Access Card for Financial Accounting: Information and Decisions
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