Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Question
Chapter 19, Problem 19.5P
To determine
Concept Introduction:
Accounting treatment of Public Universities transactions:
GASB Statement No. 35 for public colleges and universities are required to is the guidance for special purpose governments engaged in business-type activities, the day to day activities of public universities are recorded in current funds which consists of self-balancing sub-funds. The restricted current fund accounts for those resources available only for an externally specified purpose. The plant fund account for capital assets and for resources to be used to acquire additional capital assets related to capital assets.
To prepare:
Expert Solution & Answer
Answer to Problem 19.5P
- Entry $22,000,000 bond floated at par
- Entry when construction of computer complex $5,000,000
- Mandatory transfer of $385,000 has been made
- Half yearly interest on bonds payment transferred on 31 December
- Construction of complex completed with additional cost of $17,000,000
- Cost of complex is transferred
- Construction of complex completed with additional cost of $17,000,000
- Payment made for bond principal $2,000,000 and interest $770,000
- Land and building received appraised at Land $200,000 building $350,000
- Payment on Mortgage on property $90,000
- Donation of $100,000 received for acquisition of first edition
- Donation of $100,000 received for acquisition of first edition
| Debit $ | Credit $ | |
| Cash | 22,000,000 | |
| Bonds payable | 22,000,000 |
Interest on bond payable
| Debit $ | Credit $ | |
| Expenses − Interest on bonds | 770,000 | |
| Interest on bond payable | 770,000 |
| Debit $ | Credit $ | |
| Construction in progress | 5,000,000 | |
| Contracts payable | 5,000,000 |
Half yearly interest on bonds payment transferred
| Debit $ | Credit $ | |
| Interest on bonds payable | 770,000 | |
| Cash | 770,000 |
| Debit $ | Credit $ | |
| Contract payable | 3,85000 | |
| Cash | 3,85000 |
| Debit $ | Credit $ | |
| Expenses Interest on bonds | 770,000 | |
| Interest on bond payable | 770,000 |
| Debit $ | Credit $ | |
| Construction in progress | 17,000,000 | |
| Contract payable | 1,000,000 | |
| Cash | 16,000,000 |
| Debit $ | Credit $ | |
| Building | 22,000,000 | |
| Construction in progress | 22,000,000 |
| Debit $ | Credit $ | |
| Bonds payable | 2,000,000 | |
| Interest on bonds payable | 770,000 | |
| Contracts payable | 2,770,000 |
| Debit $ | Credit $ | |
| Contract payable | 2,770,000 | |
| Cash | 2,770,000 |
| Debit $ | Credit $ | |
| Land | 200,000 | |
| Building | 350,000 | |
| Revenue − Unrestricted property contribution | 550,000 |
| Debit $ | Credit $ | |
| Mortgage payable | 90,000 | |
| Cash | 90,000 |
Pledge receivable for remodelling the building
| Debit $ | Credit $ | |
| Contribution receivable | 100,000 | |
| Revenue − Unrestricted contribution | 100,000 |
Pledge uncollectable
| Debit $ | Credit $ | |
| Expenses institutional support (provision for uncollectable contribution) | 5,000 | |
| Allowance for Uncollectable contribution | 5,000 |
| Debit $ | Credit $ | |
| Cash | 100,000 | |
| Revenue − Temporarily restricted contribution | 100,000 |
| Debit $ | Credit $ | |
| Library books | 160,000 | |
| Cash | 100,000 | |
| Accounts payable | 60,000 |
Explanation of Solution
- The above entry can be explained receipts form bond floatation received and credited to bond payable accounts and accrued interest has been recognized.
- Construction begins hence amount recognised as entry for construction in progress account has been recognised.
- Construction begins mandatory transfer of 3,85000 has been made and interest for December 31 has been recognized
- Bond interest payable on December 31 has been paid
- Bond interest payable on December 31 has been paid
- Bond interest payable on December 31 has been paid
- Bond redemption has been carried out for $2,000,000 and interest on bonds due on the date has been paid.
- Bond redemption and Bond interest payable is recognized
- Property gifted is treated as revenue unrestricted and mortgage has been assumed.
- Pledges are the promised contributions which are recognized and a provision for uncollectable pledges have been created
- Temporarily restricted contribution received for acquisition of first addition
- First addition purchased and payment made on the same was recorded.
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