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Provide the journal entries for the governmental fund AND government-wide statements.
In January 2017, a city is awarded a reimbursement grant of $700,000 to provide diversity training to its employees. During 2017, it expends $450,000 on training, for which it is reimbursed $250,000. It expects to be reimbursed for the remaining $200,000 balance in March 2018 and to expend and be reimbursed for the remaining $250,000 of its grant later in 2018. Record all entries for 2017, including training costs.
Fund
Government-wide
A city levies property taxes of $750,000 for the year 2017. In 2017, it collects $500,000. In addition, it collects $80,000 in January and in $120,000 in February 2018 and estimates that of the remaining $50,000, $40,000 will be collected in March 2018 and $10,000 will be uncollectible. Record entries in 2017.
Fund
Government-wide
Questions
1.Revenues can be the result of an exchange or non-exchange transaction. For each of the following revenues (recognized by a city) indicate the category into which it fits best.
A state grant that the city must accept and provide drug education seminars for school age children
_______________________________________________
Revenue from toll roads
_______________________________________________
c. Parking Ticket
_______________________________________________
2. The City of Sebring received two contributions during its current fiscal year:
A local resident contributed 50 acres of land to the City. The City agreed that it would sell the land and use the proceeds to add a new bingo hall for senior citizens. The resident (donor) paid $600,000 for the land. When it was contributed, it had a fair value of $1.2 million. The City sold the land to a developer a month after its fiscal year-end for $1.5 million.
A developer contributed 9 acres of land as part of an agreement with the City to allow more houses to be built per acre than current zoning laws permit. The City will use the land to build a park. The developer purchased the land for $1.5 million. The fair value of the land at the time of the contribution was $1.9 million.
Prepare journal entries to record each of these contributions in the City’s general fund.
Land to be sold
Land to be used as a park
Expert Answer
Journal Entries
| S.No. | Particulars | L.F. | Dr Amount | Cr Amount |
|---|---|---|---|---|
| 1 | FUND | |||
| Expenditure a/c Dr | $ 450,000 | |||
| To Cash a/c | $ 450,000 | |||
| Cash a/c Dr | $ 250,000 | |||
| To Revenue Defferred a/c | $ 250,000 | |||
| GOVERNMENT WIDE | ||||
| Training Expense a/c Dr | $ 450,000 | |||
| To Cash a/c | $ 450,000 | |||
| Cash a/c Dr | $ 250,000 | |||
| To Revenue Defferred a/c | $ 250,000 | |||
| 2. | FUND | |||
| Property taxes Receivable a/c Dr | $750,000 | |||
| To Allowance for Uncollectible Tax a/c | $10,000 | |||
| To Revenue a/c | $740,000 | |||
| Cash a/c Dr | $500,000 | |||
| To Property Taxes Receivable a/c | $500,000 | |||
| GOVERNMENT WIDE | ||||
| Property taxes Receivable a/c Dr | $750,000 | |||
| To Allowance for Uncollectible Tax a/c | $10,000 | |||
| To Revenue | $740,000 | |||
| Cash a/c Dr | $500,000 | |||
| To Property taxes Receivable a/c | $500,000 |
3. a. A state grant that the city must accept and provide drug education seminars for school age children – Non-Exchange transaction
b. Revenue from toll roads – Exchange transaction
c. Parking Tickets – Exchange transacton
4. Journal Entries
Land to be sold – The entry will be made in the next year when the land is sold to the builder
Land to be used as park –
Land a/c Dr $1.5 million
To Revenue a/c $1.5 million
