Accounting for governmental & nonprofit entities
For numbers 1 15, journalize the transaction using the Review Journals spreadsheet. On the same spreadsheet, tell if each transaction will affect any of the following statements: the Statement of Net Assets, the Statement of Activities, the Fund Balance Sheet, Statement of Revenues, and Expenditures & Changes in Fund Balance. 1. Record the approved budget for the general fund for fiscal year 2011 (approved on February 28) using the following: Revenues Taxes: (Only 95% of taxes is deemed collectible) Real Property $1,500,000 Sales $700,000 Interest and Penalties on Taxes $6,000 Intergovernmental Revenue $280,000 Charges for Services $192,000 Total Estimated Revenues $2,678,000
Appropriations General Government $ 1,100,000 Public Safety: Police $550,000 Fire $550,000 Building Safety $175,000 Public Works $800,000 Health and Welfare $650,000 Parks and Recreation $500,000 Total Appropriations $3,225,000
Other Financial Uses $50,000
2. 3/1/2011 – Enter into contract to purchase salt for snow clearance for Public Works. Purchase order for $800,000
3. 4/25/2011 – Purchase three police cars at $25,000 each
4. 5/16/2011 Received $550,000 of salt and invoice
5. 6/1/2011 Received approval for bond issuance of $2,500,000 to purchase land and build a new playground. General taxes will be used to retire the debt. Bonds will not be issued until September 1 (annual interest rate on bonds is 5%).
6. 6/30-2011 Paid for $550,000 for salt
7. 7/15/2011 Received remaining salt at $225,000
8. 7/30/200 Paid $225,000 for salt.
9. 8/1/2011 Received the following revenues: Real Property $650,000 Sales $80,000 Interest and Penalties on Taxes $1,000 Intergovernmental Revenue $120,000 (80,000 from federal grant and 40,000 from state grant) Charges for Services $80,000
10. 9/1/2011 Received $2,400,000 on bond issue with a face value of $2,500,000. Principal payment of $250,000 is due 9/1 annually and Interest payments are due semiannually on 9/1 and 3/1 of every year. The proceeds were used to purchase land for $100,000 and enter into a construction contract for 2,000,000.
11. 10/5/2011 – $50,000 is moved from General fund to an internal service fund.
12. 10/31/2011 – Purchased building safety materials and supplies for $175,000. Assume invoice and payment occurred on date of purchase.
13. 11/1/2011 Entered into lease to own agreement for equipment used for Public Safety. The lease payments are $5,000 annually for 10 years. The first payment was due 11/1/2011. Assume a 10% interest rate and the fair value amount of the property is 32,000.
14. 12/31/2011 Perform closing entries for the following only: Appropriations for Public Works (salt purchase), accrued interest on bonds, and accrued interest on capital lease (if applicable). It was also determined that $6,000 of Sales Tax is delinquent. Record journal entry to reclassify asset
15. 1/1/2012 Create the debt service fund (including budget) to make principal and interest payments for the 2011 $2,500,000 bond issuance.