Problem 4-1 - Government Accounting PDF

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Government Accounting...

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Problem 4-1 (Interfund Transactions and Errors) (a) Journal Entries: Prepare general journal entries to record the following transactions in the General Ledger of the General Fund or a Special Revenue Fund, as appropriate. (b) Reporting: Explain how these transactions and events are reported (affect) in the General Fund or Special Revenue Fund Statements of Revenues, Expenditures, and Changes in Fund Balance. 1.

2.

3.

$100,000 of General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance. a.

Dr. Transfer to internal service fund 100,000 Cr. Cash 100,000 (to record transfer of fund to establish internal service fund )

b.

Reported in the General Fund Statement of Rev, Exp, and Changes in Fund Bal either as transfers in or as transfers out in the “Other Financing Sources (Uses)” section.

A truck – acquired 2 years ago with General Fund revenues for $19,00 – with a fair value of $10,000 was contributed to a department financed by an Enterprise Fund. (Record the contribution of the asset to the Enterprise Fund – not the purchase.) a.

No journal entry recorded in general fund account

b.

Transaction will not be reported in operating statement of general fund

The Sanitation Department, accounted for in the General Fund, billed the Municipal Airport, accounted for in an Enterprise Fund, $800 for garbage collection. a.

b.

4.

b.

6.

800 800

Reported in the General Fund Statement of Rev, Exp, and Changes in Fund Bal as revenues from inter fund services provided and used transactions are reported with other revenues in the “Revenues” section.

General Fund cash of $50,000 – to be repaid in 90 days – was provided to enable construction to begin on a new courthouse before a bond issue was sold. a.

5.

Dr. Due from airport enterprise fund Cr. Revenue (an interfund services transaction)

Dr. Due from capital project fund Cr. Cash (an interfund services transaction)

50,000 50,000

Transaction is related with capital project fund. Thus, it will NOT be recorded in the operating statement of general fund.

A $9,000,000 bond issue to finance construction of a major addition to the civic center was sold at par. The civic center is accounted for as part of general government activities. a.

No journal entry in general or special revenue fund

b.

Transaction is related with capital project fund thus; it will NOT be recorded in the operating statement of general fund.

General Fund disbursements during May included a contribution of $35,000 to a Capital Projects Fund to help finance a major capital project. a.

Other Financing Use – Transfer to

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