Introduction: Government accounting means
General fund: General fund is the primary fund maintained by the companies for recording all inflows and outflows except which are associated with the special purpose funds. It is mostly the difference between assets and liabilities of the company’s fund.
Funds: It is the fiscal or accounting entities in the government unit. It is set of accounts with self-balancing to record the transactions.
The
Explanation of Solution
The journal entries in all the funds affected for the year ended December 31, 20X8 is as follows:
Case 1:
Date | Particulars | Debit ($) | Credit ($) |
October 31, 20X8 | Cash | 800,000 | |
To Other financing sources-Bond issued | 800,000 | ||
(Recording entry for issuing $800,000 bonds) | |||
October 31, 20X8 | Encumbrances | 750,000 | |
To Budgetary fund balance- reserved | 750,000 | ||
(Recording entry for acceptance of contractor's bid) | |||
December 31, 20X8 | Budgetary fund balance- reserved | 250,000 | |
To Encumbrances (750000*1/3) | 250,000 | ||
(Recording entry for completion of one-third of the contract) | |||
December 31, 20X8 | Expenditure | 246,000 | |
To Contracts payable | 246,000 | ||
(Recording entry for actual construction cost incurred) |
Case 2:
Date | Particulars | Debit ($) | Credit ($) |
December 31, 20X8 | Estimated revenue | 112,000 | |
To Appropriations | 108,000 | ||
Budgetary fund balance-unreserved | 4000 | ||
(Recording entry for budgeted revenue and appropriations) | |||
December 31, 20X8 | Cash | 109,000 | |
To revenue account | 109,000 | ||
(Recording entry for collection of hotel room taxes) | |||
December 31, 20X8 | Expenditures (81000+22000) | 103,000 | |
To voucher payable | 103,000 | ||
(Recording entry for expense incurred for general promotion and purchase of motor vehicle) | |||
December 31, 20X8 | Vouchers payable | 103,000 | |
To cash | 103,000 | ||
(Recording entry for payment of expenses) |
Case 3:
Date | Particulars | Debit ($) | Credit ($) |
December 31, 20X8 | Transfer out-Debt service fund | 313,500 | |
To cash | 313,500 | ||
(Recording entry for transfer of resources from general fund to debt service fund) | |||
December 31, 20X8 | Cash | 313,500 | |
To Other financing sources-Transfer in general fund | 313,500 | ||
(Recording entry for closing nominal accounts) | |||
December 31, 20X8 | Expenditure-Interest | 13,500 | |
To Interest payable | 13,500 | ||
(Recording entry for interest on bonds due) | |||
December 31, 20X8 | Expenditure-bond payable | 300,000 | |
To bond payable | 300,000 | ||
(Recording entry for bonds due) | |||
December 31, 20X8 | Interest payable | 13,500 | |
Bond payable | 300,000 | ||
To cash | 313,500 | ||
(Recording entry for payment of bonds and its interest) |
Case 4:
Date | Particulars | Debit ($) | Credit ($) |
December 31, 20X8 | Budgetary fund balance- reserved | 83,000 | |
To Encumbrances | 83,000 | ||
(Recording entry to close outstanding encumbrances) | |||
December 31, 20X8 | Fund balance-unreserved | 83,000 | |
To Fund balance- Reserved for encumbrances | 83,000 | ||
(Recording entry to close outstanding encumbrances) |
Case 5:
Date | Particulars | Debit ($) | Credit ($) |
December 31, 20X8 | Fund balance-reserved for inventories | 3000 | |
To Inventories (45000-42000) | 3000 | ||
(Recording entry for adjustment of inventories at the end of the year) |
Want to see more full solutions like this?
Chapter 18 Solutions
Connect Access Card For Advanced Financial Accounting
- Prepare journal entries for a local government to record the following transactions, first for fund financial statements and then for government-wide financial statements. The government sells $900,000 in bonds at face value to finance construction of a warehouse. A $1.1 million contract is signed for construction of the warehouse. The commitment is required, if allowed. A $130,000 transfer of unrestricted funds was made for the eventual payment of the debt in (a). Equipment for the fire department is received with a cost of $12,000. When it was ordered, an anticipated cost of $11,800 had been recorded. Supplies to be used in the schools are bought for $2,000 cash. The consumption method is used. A state grant of $90,000 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. Property tax assessments are mailed to citizens of the government. The total assessment is $600,000,…arrow_forwardConstruction and debt transactions can affect more than one fund. During 2021 Luling Township engaged in the following transactions related to modernizing the bridge over the Luling River. The township accounts for long-term construction projects in a capital projects fund.• On July 1 it issued 10-year, 4 percent bonds with a face value of $1 million. The bonds were sold for $1,016,510, an amount that provides an annual yield of 3.8 percent (semiannual rate of 1.9 percent). The city incurred $10,000 in issue costs.• On August 1, it was awarded a state reimbursement grant of $800,000. During the year it incurred allowable costs of $600,000. Of these it paid $500,000 in cash to various contractors. It received $450,000 from the state, expecting to receive, early in 2022, the $150,000 difference between allowable costs incurred and cash received. Moreover, it expects to receive the balance of the grant later in 2022. • It invested the bond proceeds in short-term federal securities. During…arrow_forwardPrepare journal entries for a local government to record the following transactions, first for fund financial statements and then for government-wide financial statements.a. The government sells $900,000 in bonds at face value to finance construction of a warehouse.b. A $1.1 million contract is signed for construction of the warehouse. The commitment is required, if allowed.c. A $130,000 transfer of unrestricted funds was made for the eventual payment of the debt in (a).d. Equipment for the fire department is received with a cost of $12,000. When it was ordered, an anticipated cost of $11,800 had been recorded.e. Supplies to be used in the schools are bought for $2,000 cash. The consumption method is used.f. A state grant of $90,000 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.g. Property tax assessments are mailed to citizens of the government. The total assessment is…arrow_forward
- The preclosing, year-end trial balance for a capital projects fund of the city of Clark as of December 31, 2019, follows: Debit CreditCash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75,000Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,00,000Contracts Payable—Retained Percentage. . . . . . . . . . . 60,000Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,600Other Financing Sources . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 686,600Other Financing Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .…arrow_forwardWood City, which is legally obligated to maintain a debt service fund, issued the following general obligation bonds on July 1, Year 1: Term of bonds 10 years, Face amount $1,000,000, Issue price 95 , Stated interest rate 6% Interest is payable January 1 and July 1. What amount of bond discount should be amortized in Wood's debt service fund for purposes of fund financial reporting for the year ended December 31, Year 1? A.) $1,000 B.) $500 C.) $250 D.) $0arrow_forwardThe City of Soheil 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. General fixed assets, as of the beginning of the year, which had not been recorded, were as follows: Land $ 96,000,000 Buildings 480,000,000 Improvements other than buildings 270,000,000 Equipment 60,000,000 Accumulated depreciation, capital assets 150,000,000 During the year, expenditures for capital outlays amounted to $22,700,000. Of that amount, $10,600,000 was for buildings; $8,300,000 was for improvements other than buildings, $95,000 was capitalized interest and the remainder was for land. The capital outlay expenditures outlined in (B) were completed at the end of the year (no depreciation until next year). For purposes of financial statement…arrow_forward
- 4.) Armstrong County established a County Office Building Construction Fund to account for a project expected to take less than one year to complete. The County's fiscal year ends on June 30. On July 1, 2023, bonds were sold at par in the amount of $7,500,000 for the project. On July 5, a contract was signed with the Sellers Construction Company in the amount of $7,390,000. On December 30, a progress bill was received from Sellers in the amount of $5,000,000. The bill was paid, except for the 5 percent retained upon final inspection. On June 1, a final bill was received in the amount of $2,390,000 from Sellers, which was paid, except for the 5 percent retained. An appointment was made between the county engineer and Bill Sellers to inspect the building and to develop a list of items that needed to be corrected. On the day of the meeting, the county engineer discovered that Sellers had filed for bankruptcy and moved out of the state. The City incurred a liability in the amount of…arrow_forward4.) Armstrong County established a County Office Building Construction Fund to account for a project expected to take less than one year to complete. The County's fiscal year ends on June 30. On July 1, 2023, bonds were sold at par in the amount of $7,500,000 for the project. On July 5, a contract was signed with the Sellers Construction Company in the amount of $7,390,000. On December 30, a progress bill was received from Sellers in the amount of $5,000,000. The bill was paid, except for the 5 percent retained upon final inspection. On June 1, a final bill was received in the amount of $2,390,000 from Sellers, which was paid, except for the 5 percent retained. An appointment was made between the county engineer and Bill Sellers to inspect the building and to develop a list of items that needed to be corrected. On the day of the meeting, the county engineer discovered that Sellers had filed for bankruptcy and moved out of the state. The City incurred a liability in the amount of…arrow_forward1. Employees of the General Fund of Scott City earn ten days of vacation for each 12 months of employment. The City permits employees to carry the vacation days forward as long as they wish. During the current year employees earned $800,000 of vacation benefits, of which the City estimates that $500,000 will be taken in the next year and the balance will be carried forward. Assuming that the City maintains its books and records in a manner that facilitates the preparation of its fund financial statements, which of the following entries is the correct entry in the General Fund to record the vacation pay earned during the current period? a. Debit Expenditures $800,000; Credit Vacation Pay Payable $800,000. b. Debit Expenditures $500,000; Credit Vacation Pay Payable $500,000. c. Debit Vacation Expense $800,000; Credit Vacation Pay Payable $800,000. d. No entry required. 2.Employees of the General Fund of Scott City earn ten days of vacation for each 12 months of employment. The City…arrow_forward
- Bilberry County voted to establish an internal service fund to account for printing and copying for all its departments and agencies. The county engaged in the following activities related to the new fund on 1/1/2019. a) The county commission voted to transfer $300,000 from the general fund to the internal service fund to establish the new fund. b) Entered into a capital lease for equipment to be used in printing activities. The total present value of the lease obligation is $600,000. c) Issued $2 million in general obligation bonds at 101. The bonds were issued to acquire additional equipment and are to be serviced from the internal service fund. d) Purchased equipment for $1,950,000. The equipment has an estimated useful life of 10 years and an estimated salvage value of $150,000. e) Billed the general fund for copying and printing charges, $70,000. f) Paid salaries to printing employees, $50,000. a. Total Fixed Asset reported on the financial statement as of 1/1/2019 is? b. Total…arrow_forwardBilberry County voted to establish an internal service fund to account for printing and copying for all its departments and agencies. The county engaged in the following activities related to the new fund on 1/1/2019. a) The county commission voted to transfer $300,000 from the general fund to the internal service fund to establish the new fund. b) Entered into a capital lease for equipment to be used in printing activities. The total present value of the lease obligation is $600,000. c) Issued $2 million in general obligation bonds at 101. The bonds were issued to acquire additional equipment and are to be serviced from the internal service fund. d) Purchased equipment for $1,950,000. The equipment has an estimated useful life of 10 years and an estimated salvage value of $150,000. e) Billed the general fund for copying and printing charges, $70,000. f) Paid salaries to printing employees, $50,000. Total liability reported on the Financial statement as of 1/1/2019 is? answer please.arrow_forwardA $40 million contract is awarded by a county for construction of a building. Bonds are issued to finance construction, in the amount of $40 million. During the first year, $10 million is paid in cash to contractors for work done. At year-end, the capital projects fund reports the following fund balances: Question 43 options: a) Unavailable: $40 million b) Restricted $20 million, Committed: $10 million c) Restricted: $40 million d) Restricted: $30 millionarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education