Concept explainers
Journalize the entries for the given information under general fund and governmental activities.
Explanation of Solution
Debit: A debit is an accounting term that refers to the left side of an account. The term debit is be denoted by (Dr). The recording amount on the left side of the account is known as debiting.
Credit: A credit is an accounting term that refers to the right side of an account. The term credit is denoted as (Cr). The recording amount on the right side of the account is known as crediting.
Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all the increase in the assets, the expenses and the dividends, all the decrease in liabilities, revenues and the
stockholders’ equities . - Credit, all the increase in the liabilities, the revenues, and the stockholders’ equities, and all decreases in the assets, and the expenses.
Pass the journal entries for the given transactions:
Date | Description | Debit | Credit |
1 | Capital Project fund: | ||
Cash | $6,000,000 | ||
Other financing sources - Proceeds of Bond | $6,000,000 | ||
(To record the bonds issued) | |||
Governmental Activities: | |||
Cash | $6,080,000 | ||
Bonds Payable | $6,000,000 | ||
Premium on Bonds Payable | $60,000 | ||
Accrued Interest Payable (1) | $20,000 | ||
(To record the bonds issued) | |||
2 | Capital Project fund: | ||
Cash | $650,000 | ||
Revenues | $650,000 | ||
(To record the receipt of federal grant) | |||
Governmental Activities: | |||
Cash | $650,000 | ||
Program Revenue—Culture And Recreation—Capital Grants And Contributions | $650,000 | ||
(To record the receipt of federal grant) | |||
3 | Capital Project fund: | ||
Cash | $250,000 | ||
Other financing sources - Interfund Transfers In | $29,000 | ||
(To record the lease of car) | |||
Governmental Activities: | |||
No Entry | |||
4 | Capital Project fund: | ||
Encumbrances | $6,800,000 | ||
Encumbrances outstanding | $6,800,000 | ||
(To record the encumbrances) | |||
Governmental Activities: | |||
No Entry | |||
5 | Capital Project fund: | ||
Encumbrances | $6,800,000 | ||
Encumbrances outstanding | $6,800,000 | ||
(To record the encumbrances) | |||
Construction Expenses | $6,890,000 | ||
Cash | $6,890,000 | ||
(To record the construction expenses) | |||
Governmental Activities: | |||
Construction work in progress | $6,890,000 | ||
Cash | $6,890,000 | ||
(To record the construction expenses) | |||
Land | $200,000 | ||
Building | $6,295,000 | ||
Machinery and Equipment | $395,000 | ||
Construction work in progress | $6,890,000 | ||
(To record the cost of building) | |||
6 | Capital Project fund: | ||
To close nominal accounts: | |||
Other Financing sources - Proceeds of Bonds | $6,000,000 | ||
Other Financing sources - Interfund Transfers In | $250,000 | ||
Revenues | $650,000 | ||
Construction Expenditures | $6,890,000 | ||
Fund Balance - Restricted | $10,000 | ||
(To record the closing entry) | |||
To close the funds: | |||
Other Financing sources - Interfund Transfers Out | $10,000 | ||
Cash | $10,000 | ||
(To record the transfer of balance funds) | |||
Fund Balance - Restricted | $10,000 | ||
Other Financing sources - Interfund Transfers Out | $10,000 | ||
(To record the transfer of balance funds) | |||
Governmental Activities: | |||
No Entry |
Working Notes (1):
Calculate the accrued interest payable.
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Chapter 5 Solutions
GOVERNMENTAL ACCOUNTING 18E
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