Prepare the general journal form to record each transaction that are necessary in the governmental activities and appropriate fund journals.
Explanation of Solution
Government wide financial statements: This statement provides an aggregated overview of the government net position and their changes in the net position. This statement reports on the government as a whole and assess whether the government has used the resources efficiently and effectively (operational accountability) to meet the operating objectives.
Prepare the general journal form to record each transaction that are necessary in the governmental activities and appropriate fund journals:
Date | Accounts and Explanation | Post ref. | Debit | Credit |
1. | General fund: | |||
Cash | $750,000 | |||
Revenues | $750,000 | |||
(To record the collection of general fund) | ||||
General fund: | ||||
Other financing uses - inter fund Transfer out | $750,000 | |||
Cash | $750,000 | |||
(To record the transfer out of funds) | ||||
Debt service fund: | ||||
Cash | $750,000 | |||
Other financing sources – inter fund Transfer in | $750,000 | |||
(To record the transfer – in of funds) | ||||
Debt service fund: | ||||
Principal expenditure | $600,000 | |||
Interest expenditure | $150,000 | |||
Cash | $750,000 | |||
(To record the principal and interest expenditure) | ||||
Governmental activities: | ||||
Cash | $750,000 | |||
General revenue –taxes | $750,000 | |||
(To record the collection of taxes) | ||||
Governmental activities: | ||||
Expenses—interest on long–term debt | $150,000 | |||
Bonds payable | $ 600,000 | |||
Cash | $750,000 | |||
(To record the interest and bond payable expense) | ||||
2. | Capital project fund: | |||
Cash | $5,000,000 | |||
Other financing sources – proceeds of bonds | $5,000,000 | |||
(To record the issuance of serial bonds) | ||||
Debt service fund: | ||||
Cash | $150,000 | |||
Other financing sources – premium on bonds payable (1) | $100,000 | |||
Revenues | $50,000 | |||
(To record the premium and revenue from sale) | ||||
Governmental activities: | ||||
Cash | $5,150,000 | |||
Serial bonds payable | $5,000,000 | |||
Interest payable | $50,000 | |||
Premium on bonds payable | $150,000 | |||
(To record the payables) | ||||
3. | Special revenue fund: | |||
Cash | $110,000 | |||
Revenues | $110,000 | |||
(To record the collection of general fund) | ||||
Special revenue fund: | ||||
Other financing uses - inter fund Transfer out | $110,000 | |||
Cash | $110,000 | |||
(To record the transfer out of funds) | ||||
Debt service fund: | ||||
Cash | $110,000 | |||
Other financing sources – inter fund Transfer in | $110,000 | |||
(To record the transfer – in of funds) | ||||
Debt service fund: | ||||
Principal expenditure (balancing figure) | $94,191 | |||
Interest expenditure | $15,809 | |||
Cash | $110,000 | |||
(To record the principal and interest expenditure) | ||||
Governmental activities: | ||||
Cash | $110,000 | |||
General government revenues –capital grants and contributions | $110,000 | |||
(To record the revenues of general government) | ||||
Governmental activities: | ||||
Expenses—interest on capital leases | $15,809 | |||
Capital lease obligation payable | $94,191 | |||
Cash | $110,000 | |||
(To record the interest and capital lease expense) | ||||
4. | Debt service fund: | |||
Cash | $3,500,000 | |||
Other financing sources – proceeds of refunding bonds | $3,500,000 | |||
(To record the proceeds of refunding of bonds) | ||||
Debt service fund: | ||||
Other financing uses – payment to refunded bond escrow agent | $3,500,000 | |||
Cash | $3,500,000 | |||
(To record the payment of bonds to escrow agent) | ||||
Governmental activities: | ||||
Cash | $3,500,000 | |||
Serial bonds payable | $3,500,000 | |||
(To record the serial bonds payable) | ||||
Governmental activities: | ||||
Term bonds payable | $3,500,000 | |||
Cash | $3,500,000 | |||
(To record the term bonds payable) | ||||
5. | Debt service fund: | |||
Cash | $500,000 | |||
Other financing sources – proceeds of Special assessment bonds | $500,000 | |||
(To record the proceeds of special assessment bonds) | ||||
Debt service fund: | ||||
Assessments receivable—current | $25,000 | |||
Assessments receivable—unavailable | $475,000 | |||
Revenues | $25,000 | |||
Deferred inflows of resources- Unavailable Revenues | $475,000 | |||
( To record the assessment receivable) | ||||
Governmental activities: | ||||
Cash | $500,000 | |||
Special assessment debt with governmental commitment | $500,000 | |||
(To record the special assessment debt) | ||||
Governmental activities: | ||||
Assessments receivable—current | $25,000 | |||
Assessments receivable—unavailable | $475,000 | |||
General government revenues –capital grants and contributions | $25,000 | |||
Deferred inflows of resources- Unavailable Revenues | $475,000 | |||
( To record the assessment receivables and revenues) | ||||
Governmental activities: | ||||
Interest expense on special assessment debt | $10,000 | |||
Interest payable (2) | $10,000 | |||
(To record the interest expense on special assessment debt) | ||||
6. | Capital project fund: | |||
Cash | $5,000,000 | |||
Other financing sources – proceeds of bonds | $5,000,000 | |||
(To record the issuance of bonds) | ||||
Capital project fund: | ||||
Expenditures | $50,000 | |||
Cash | $50,000 | |||
(To record the bond issuance costs) | ||||
Governmental activities: | ||||
Cash | $5,000,000 | |||
Bonds payable | $5,000,000 | |||
(To record the issuance of bonds) | ||||
Governmental activities: | ||||
Bond issuance expenses | $45,000 | |||
Prepaid insurance costs | $5,000 | |||
Bonds payable | $50,000 | |||
(To record the debt issuance expense and prepaid insurance costs) |
Table (1)
Working note 1: Compute premium on bonds:
It can be computed by multiplying serial bond payable amount with the rate of premium. The rate of premium is computed by deducting the face value from the selling value. Hence, the rate of premium is 2%
Hence, the premium on bonds amount is $100,000.
Working note 2: Compute the interest expense on special assessment debt:
Given: The rate of interest is 6% and the interest is paid prior to four months. The special assessment bonds are $500,000.
Hence, the interest expense on special assessment debt amount is $10,000 for the four months prior to year-end.
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