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Chapter 18, Modern Advanced accounting-review Q & exr

Chapter 18, Modern Advanced accounting-review Q & exr

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CHAPTER 18GOVERNMENTAL ENTITIES: OTHER GOVERNMENTALFUNDS AND ACCOUNT GROUPS
The title of each problem is followed by the estimated time in minutes required for completion and by a difficultyrating. The time estimates are applicable for students using the partially filled-in working papers.
Pr. 18–1
 Ridge City
(20 minutes, easy)
Journal entries for a governmental entity's general capital assets account group.
Pr. 18–2
Town of Dilbey
(30 minutes, medium)
Financial statements for a governmental entity's capital projects fund at end of its first year of operations.
Pr. 18–3
Town of Logan
(30 minutes, medium)
Journal entries for two construction projects, in capital projects fund for project financed by generalobligation bonds and in special revenue fund for project financed by special assessments bonds, of a governmental entity.
Pr. 18–4
Webster Village
(30 minutes, medium)
Given journal entries for a governmental entity general fund, prepare journal entries for other affected funds and account groups.
Pr. 18–5
Calabash County
(30 minutes, medium)
Prepare journal entries for funds and account groups for four transactions or events of agovernmental entity.
Pr. 18–6
City of Arlette
(30 minutes, medium)
Journal entries for affected funds and account groups for a capital lease of a governmental entity.
Pr. 18–7
City of Ordway
(40 minutes, medium)
Preparation of journal entries and balance sheet for capital projects fund of a governmental entity.
Pr. 18–8
City of Wilmont 
(40 minutes, medium)
Journal entries, including closing entries (explanations omitted), for capital projects fund of agovernmental entity.
Pr. 18–9
 Angelus School District 
(50 minutes, strong)
Journal entries for transactions and events of general fund, capital projects fund, general capitalassets account group, and general long-term debt account group of a governmental entity.
ANSWERS TO REVIEW QUESTIONS
1.Fees for rubbish collection, state gasoline taxes, and traffic violation fines, and proceeds of specialassessments (including related bonds) are among the taxes or fees that often are accounted for inspecial revenue funds of a governmental entity.2.The Town of Groman General Fund credits the Expenditures ledger account because the amountreceivable from the Special Revenue Fund is a reimbursement of General Fund expenditures.3.Proceeds of general obligation bonds issued at face amount by a governmental entity are accountedfor as other financing sources of a capital projects fund because the proceeds are not
revenues
of that fund.4.A separate debt service fund is not established for every issue of general obligation bonds of agovernmental entity. In the absence of legal requirements for a debt service fund or of a formal plan for accumulation of a sinking fund, a debt service fund may be unnecessary.
© 
The McGraw-Hill Companies, Inc., 2006 
232
Modern Advanced Accounting, 10/e
 
5.The probable explanation of the illustrated journal entry is to record payment of cash to a bank trust department acting as fiscal agent for the payment of bond principal and interest.6.The recognition of depreciation of plant assets is appropriate for all assets of a governmentalentity's general capital assets account group except for certain infrastructure and inexhaustible(land and certain works of art) assets
.
7.The Investment in General Capital Assets from Gifts ledger account is credited for the current fair value of plant assets donated to a governmental entity for its general use, as opposed to use by a proprietary fund or a trust fund.8.A balance sheet is not issued for a governmental entity's general capital assets account group because an account group is not a
fund.
9.The journal entry in the Village of Marvell General Long-Term Debt Account Group is incorrect;Amount Available in Debt Service Fund should be
debited,
and Amount to Be Provided should be
credited.
10.For a capital lease for fire engines, a governmental entity's general fund records the appropriationsand expenditures for the lease payments; the general long-term debt account group records theliability under the capital lease; and the general capital assets account group records the leasedassets under the capital lease and the related depreciation.11.A liability for special assessment bonds is recorded in a governmental entity's general long-termdebt account group if the governmental entity is obligated in some manner for the payment of the bonds if the assessed property owners default.
SOLUTIONS TO EXERCISES
Ex. 18–1
1.
a
9.
2.
b
10.
b
3.
b
11.
4.
c
12.
5.
a
13.
c
6.
a
14.
c
7.
b
15.
8.
b
16.
b
Ex. 18–2
Journal entries for County of Larchmont Special Revenue Fund, July, 2005:Taxes Receivable
  
Current480,000Allowance for Uncollectible Current Taxes ($480,000x 0.015)7,200Revenues472,800To accrue property taxes billed and to provide for estimateduncollectible portion.Cash142,700Taxes Receivable
  
Current142,700To record collection of property taxes during July, 2005
Ex. 18–3
Computation of present value of City of Garbo 6% serial bonds, July 1, 2005:July 1, 2003 payment [($200,000 + $60,000) x 0.925926*)]$240,741July 1, 2004 payment [($200,000 + $48,000) x 0.857339*)]212,620July 1, 2005 payment [($200,000 + $36,000) x 0.793832*)]187,344July 1, 2006 payment [($200,000 + $24,000) x 0.735030*)]164,647July 1, 2007 payment [($200,000 + $12,000) x 0.680583*)]144,284Present value of 6% serial bonds$949,636*From present value tables.
Ex. 18–4
Journal entry for County of Pinecrest Capital Projects Fund, July 1, 2005:
© 
The McGraw-Hill Companies, Inc., 2006 
233
Modern Advanced Accounting, 10/e
 
Cash1,200,000Other Financing Sources1,200,000To record receipt of proceeds of 30-year, 5% general obligation bonds issued at face amount.Journal entry for County of Pinecrest General Long-Term Account Group, July 1, 2005:Amount to Be Provided1,200,000Term Bonds Payable1,200,000To record liability for 30-year, 5% general obligation bonds issuedto finance construction of public health center.
Ex. 18–5
Journal entry for Town of Wallen Debt Service Fund, Apr. 30, 2006:Matured Bonds Payable50,000Matured Interest Payable ($50,000 x 0.08 x ½)2,000Cash with Fiscal Agent52,000To record fiscal agent's payment of bond principal and interest.
Ex. 18–6
Journal entry in Bucolic Township General Fund, Mar. 18, 2006:Other Financing UsesTransfers Out140,000Cash140,000Journal entry in Bucolic Township Debt Service Fund, Mar. 18, 2006:Cash140,000Other Financing SourcesTransfers In140,000Journal entry in Bucolic Township General Long-Term Debt Account Group, Mar. 18, 2006:Amount Available in Debt Service Fund140,000Amount to Be Provided140,000
Ex. 18–7
Journal entries for Nemo County, Sept. 1, 2005:GFExpenditures80,000Cash80,000Fund Balance Reserved for Encumbrances79,600Encumbrances79,600GCAAGMachinery and Equipment80,000Investment in General Capital Assets fromGeneral Fund Revenues80,000
Ex. 18–8
Journal entries in Wildwood Village General Fund, Mar. 24, 2006:Cash40,000Other Financing Sources40,000Expenditures450,000Cash450,000Fund Balance Reserved for Encumbrances446,000Encumbrances446,000
© 
The McGraw-Hill Companies, Inc., 2006 Solutions Manual, Chapter 18
234

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