Reference no: EM132459020
Problem - Each fund must account for interfund activity as if it were a separate accounting entity.
The newly formed Buffalo School District engaged in the following transactions and other events during the year:
1. It levied and collected property taxes of $110 million.
2. It issued $30 million in long-term bonds to construct a building. It placed the cash received in a special fund set aside to account for the bond proceeds.
3. During the year, it constructed the building at a cost of $25 million. It expects to spend the $5 million balance in the following year. The building has an estimated useful life of 25 years.
4. It incurred $70 million in general operating costs, of which it paid $63 million. It expects to pay the balance early the following year.
5. It transferred $12 million from its general fund to a fund established to account for resources set aside to service the debt. Of this, $10 million was for repayment of the debt; $2 million was for interest.
6. From the special fund established to service the debt, it paid $2 million in interest and $6 million in principal.
7. It collected $4 million in hotel taxes restricted to promoting tourism. Since the resources were restricted, they were accounted for in a special restricted fund. During the year, the district spent $3 million on promoting tourism.
8. The district established a supplies store to provide supplies to the district's various departments by transferring $4 million from the general fund. It accounted for the store in an internal service (proprietary) fund. During the year, the store purchased (and paid for) $2 million in supplies. Of these, it "sold" $1 million, at cost (for cash), to departments accounted for in the general fund. During the year, these departments used all of the supplies that they had purchased.
Required - Prepare journal entries to record the transactions and other events in appropriate funds. Assume that governmental funds are accounted for on a modified accrual basis and focus only on current financial resources (and thus do not give balance sheet recognition either to capital assets or long-term debts). Proprietary funds are accounted for on a full accrual basis.