Reference no: EM131483710
Prepare the appropriate journal entries in correct form for transactions. The following transactions are summarized for the city this year:
A. The city levied $9,000,000 of general property taxes, $8,800,000 of which has been collected. It expects to collect the balance shortly after the end of the year. These taxes are unassigned; they can be used for any legitimate city purpose. You believe these taxes should be recorded in the general fund.
B. The City received a state grant of $200,000 to purchase computers. This grant is restricted by the state for a specific purpose. You need to determine in which fund you should record (categorize) the state grant for the purchase of the computers. Remember governmental fund balance information is reported in five different classifications (non-spendable, restricted, committed, assigned and unassigned).
C. The City issued $12,000,000 in long-term bonds to construct a city building. The proceeds must be used for the intended purpose. The major types of expenditures: operating, capital, debt service, and intergovernmental charges. Capital expenditures relate to the acquisition of capital assets (such as the city building). You recall that such expenditures may be recorded in the General Fund, Special Revenue Funds, or Capital Projects Funds, depending on the source of funding.
D. The City constructed the school building for $11,000,000. You decide to account for the construction of the school building as an expenditure, causing the City Controller's asking for your justification in doing so. In gathering information from which to prepare a response, you note two things: 1) fund accounting follows the modified accrual basis of accounting and 2) fund accounting financial statements are the Fund Balance Sheet and the Statement of Fund Revenues, Expenditures, and Other Changes in Fund Balances. To prepare the memo to explain your decision to the City Controller, you browse the GASB Website in search of an authoritative explanation about the use of expenditure or expenses for fund accounting.
E. The City incurred $6,000,000 in general operating expenditures, $5.5. million of which has been paid.
F. Using its state grant, the City purchased computers for $100,000. As with the construction of the building, the City would recognize the acquisition as an expenditure. You must justify to the City Controller why the correct recording of the computers are expenditures, even though the City would record them as assets in a supplementary ledger or list. When the government-wide statements are prepared, the computers would be recognized as assets.
G. The City transferred $1,100,000 from the general fund to the debt service fund to make the first payments of both principal and interest that are due the following year. Viewed as broken down into its components, this transaction is straightforward, involving simple entries to each of the two funds. You research which funds to use for this transfer using the GASB websites above and other websites that you find during your research.