(a)
Introduction:
The journal entries for the transactions to be entered into the books of local government
(a)
Answer to Problem 19.15P
Journal Entries
S.no | Date | Particulars | Debit (in $) | Credit (in$) |
1 | Equipment purchase | 25,000 | ||
Cash | 25,000 | |||
2 | Cash | 100,000 | ||
Revenue | 100,000 | |||
3 | Cash | 55,000 | ||
Investment | 50,000 | |||
Gain on sale of investment | 5,000 | |||
4 | Cash | 1,000,000 | ||
Issue of bond | 1,000,000 | |||
Construction expenses | 1,000,000 | |||
Cash | 1,000,000 | |||
Explanation of Solution
- Recording the amount released from the general fund for the purchase of equipment
- Recording the donation received from donor
- Recording the sale of investment
- Recording the issue of bonds
(b)
Introduction: Journal entries is a systematic method of recording transactions as and when they occur. It is a summary of transactions divided into the debit and credit items that are recorded chronologically. It is an act of keeping and recoding all the transactions occurring in the business.
The journal entries for the transactions to be entered into the books of Voluntary Health and Welfare Organization
(b)
Answer to Problem 19.15P
Journal Entries
S.no | Date | Particulars | Debit (in $) | Credit (in$) |
1 | Equipment purchase | 25,000 | ||
Cash | 25,000 | |||
Cash | 25,000 | |||
Net assets realized- Asset acquisition | 25,000 | |||
Net asset realized- Asset acquisition | 25,000 | |||
Cash | 25,000 | |||
2 | Cash | 55,000 | ||
Investment- common stock | 50,000 | |||
Gain on sale of investment | 5,000 | |||
3 | Cash | 1,000,000 | ||
Bonds payable | 1,000,000 | |||
Buildings | 1,000,000 | |||
Cash | 1,000,000 | |||
Explanation of Solution
- Recording the asset acquisition
- Recording the donation received from donor
- Recording the sale of investment
- Recording the issue of bonds
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Chapter 19 Solutions
ADVANCED FINAN.ACCT.(LOOSELEAF)>CUSTOM<
- A voluntary health and welfare entity receives $32,000 in cash from solicitations made in the local community. The charity receives an additional $1,500 from members in payment of annual dues. Members are assumed to receive benefits approximately equal in value to the amount of dues paid. How should this money be recorded? Revenues of $33,500. Public support of $33,500. Public support of $32,000 and a $1,500 increase in the fund balance. Public support of $32,000 and revenue of $1,500.arrow_forwardAnswer both i and ii. please answer asap Assume instead that Good Charity prepares its annual financial statements using the restricted fund method of accounting for contributions and has chosen to have a general, capital and endowment fund to account for its activities. Jan 1: a donor contributes land for a future operations site. Land has a fair value of $32,000. Feb 1: A donor contributes $60,000 on the condition that the principal amount be invested in marketable securities and that only the income earned from the investment be spent on operations. Income of $2,000 was earned and received during 2020 on these investments. General donations of $85,000 were received during 2020. d) Feb 1: the government gave $80,000 to Good Charity to purchase equipment and furniture with a useful life of 10 years. This was all used to purchase $100,000 of equipment and furniture on July 1, 2020 and the operation opened in a rented facility on July 2, 2020. e) Costs of $72,000 were incurred…arrow_forwardA local private not-for-profit health care entity (Rochester Medical) incurred the following transactions during the current year. The entity has one program service (health care) and two supporting services (fundraising and administrative). The board of governors for Rochester Medical (RM) announces that $160,000 in previously unrestricted cash will be used in the near future to acquire equipment. These funds are invested until the purchase eventually occurs. RM receives a donation of $80,000 in cash with the stipulation that the money be invested in U.S. government bonds. All subsequent income derived from this investment must be paid to supplement nursing salaries. RM spends $27,000 in cash to acquire medicines. RM had received this money during the previous year. The donor had specified that it had to be used for medicines. RM charges patients $2 million. These amounts are the responsibility of government programs and insurance companies. These third-party payors will receive…arrow_forward
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- Governmental accounting Explain how each of the following would affect the classification of the fund balance in the General Fund. All related resources are reported as General Fund assets. 1. Inventory of materials and supplies is $50,000 but $20,000 has not yet been paid to vendors for the recent purchases of the materials and supplies on hand. 2. The finance director has committed to using $40,000 of the carryover fund balance for employee attendance at training conferences. 3. Prepaid insurance in the General Fund is $10,000. 4. The city council adopted an ordinance setting aside $100,000 for planned improvements to police training programs. 5. Unspent receipts of a tax imposed with the stipulation that the monies raised must be used for economic development total $750,000. 6. Unrestricted tax receivables total $1,000,000, however, there are related deferred inflows of resources for unavailable taxes of $740,000. 7. A long-term receivable from which collection proceeds are assigned…arrow_forwardA local private not-for-profit health care entity incurred the following transactions during the current year. Record each of these transactions in appropriate journal entry form. Prepare a schedule calculating the change in unrestricted, permanently restricted, and temporarily restricted net assets.a. The entity’s governing board announced that $160,000 in previously unrestricted cash will be used in the future to acquire equipment. The funds are invested until the purchase eventually occurs.b. Received a donation of $80,000 with the stipulation that all income derived from this money be used to supplement nursing salaries. c. Expended $25,000 for medicines. The entity received the money the previous year as a restricted gift for this purpose.d. Charged patients $600,000, 80 percent of which is expected to be covered by third-party payors.e. Calculated depreciation expense of $38,000.f. Received interest income of $15,000 on the investments the board acquired in…arrow_forwardA local private not-for-profit health care entity incurred the following transactions during the current year. Record each of these transactions in appropriate journal entry form. Prepare a schedule calculating the change in unrestricted, permanently restricted, and temporarily restricted net assets. The entity’s governing board announced that $160,000 in previously unrestricted cash will be used in the future to acquire equipment. The funds are invested until the purchase eventually occurs. Received a donation of $80,000 with the stipulation that all income derived from this money be used to supplement nursing salaries. Expended $25,000 for medicines. The entity received the money the previous year as a restricted gift for this purpose. Charged patients $600,000, 80 percent of which is expected to be covered by third-party payors. Calculated depreciation expense of $38,000. Received interest income of $15,000 on the investments the board acquired in transaction (a) Estimated that…arrow_forward
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