Chapter 11, Problem 38P

Prepare journal entries for the City of Pudding’s governmental funds to record the following transactions, first for fund financial statements and then for government-wide financial statements.

1. a. A new truck for the sanitation department was ordered at a cost of $94,000.
2. b. The city print shop did $1,200 worth of work for the school system (but has not yet been paid).
3. c. An $11 million bond was issued to build a new road.
4. d. Cash of $140,000 is transferred from the general fund to provide permanent financing for a municipal swimming pool that will be viewed as an enterprise fund.
5. e. The truck ordered in (a) is received at an actual cost of $96,000. Payment is not made at this time.
6. f. Cash of $32,000 is transferred from the general fund to the capital projects fund.
7. g. A state grant of $30,000 is received that must be spent to promote recycling.
8. h. The first $5,000 of the state grant received in (g) is appropriately expended.

To determine

Prepare journal entries for the City of Pudding’s governmental funds to record the following transactions, first for fund financial statements and then for government-wide financial statements.

Explanation of Solution

The journal entries for the City of Pudding’s governmental funds to record the given transactions for fund financial statements are as follows:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
a.	General Fund
	Encumbrance Control		94,000
	Fund Balance-Reserved for encumbrances			94,000
	(to record the order placed for the new work)
b.	Expenditures		1200
	Due to internal service fund			1200
	(to record the work done but not paid)
c.	Capital project Fund
	Cash		11,000,000
	Other Financing sources-Bond proceeds			11,000,000
	(being cash received from issue of bonds to construct a new road)
d.	General fund
	Other Financing Uses-Transfer Out		140,000
	Cash			140,000
	(being funds transferred from general fund to enterprise fund)
e.	General fund		11,800
	Fund Balance-Reserved for encumbrances			11,800
	Encumbrances
	(being encumbrance received for the equipment)
	Expenditures: Truck		96,000
	Vouchers Payable			96,000
f.	General fund
	Other Financing Uses-Transfer Out		32,000
	Cash			32,000
	(being funds transferred from general fund to capital project fund)
	Capital project Fund
	Cash		30,000
	Other Financing Uses-Transfer in			30,000
	(being state grant received)
g.	Special Revenue fund
	Cash		30,000
	Deferred Revenues			30,000
	(being state grant received)
h.	Special Revenue fund
	Deferred Revenues		5,000
	Cash			5,000
	(being grant expended)
	Expenditures		5,000
	Cash			5,000
	(being expenses incurred for using state grant recorded)

Table: (1)

The journal entries for the City of Pudding’s governmental funds to record the given transactions for government-wide financial statements are as follows:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
a.	The entry will be recorded when the truck has been actually received
b.	Intra-entity activity transfers are not recorded in government-wide financial statements
c.	Cash		11,000,000
	Bonds payable			11,000,000
	(being cash received from issue of bonds to construct a new road)
d.	Transfers out-Swimming pool		140000
	Cash			140000
	(being funds transferred from general fund to enterprise fund)
	Cash		140000
	Transfers in-General Fund			140000
	(being funds transferred from general fund to enterprise fund)
e.	Expenditures: Truck		96,000
	Vouchers Payable			96,000
	(being truck received)
f.	Intra-entity activity transfers are not recorded in government-wide financial statements
g.	Cash		30,000
	Deferred Revenues			30,000
	(being state grant received)
h.	Deferred Revenues		5,000
	Cash			5,000
	(being grant expended)
	Expenditures		5,000
	Cash			5,000
	(being expenses incurred for using state grant recorded)

Table: (2)