Prepare the journal entries required in the GCA and GLTL accounts of Percy County to record the following transactions. Indicate where any gains and losses occur in GOVT WIDE f/s.

1. Land was DONATED for use as the site of a bike and nature trail.The donor had acquired the land for $3,000 about 20 years earlier.Its estimated fair value when donated to the county was $40,000.

LAND………….. $40,000NET ASSETS-INVESTED INCAPITAL ASSETS……………… $40,000

* Record gift at FMV

2. Computer equipment was ordered for GF departments.The estimated cost was $48,000.

We are doing entries for the GCA and GLTL. They don'trecord encumbrances…just the assets/liabilities as they occur.

3. The computer equipment was received by the county. The actualcost was $47,750. The county had paid $42,000 to the vendorby year-end.

EQUIPMENT………….. $47,750NET ASSETS- INVESTED IN CAPITAL ASSETS……………….. $47,750

This assumes the amount due to vendors is SHORT-TERM.

4. The county sold a (general government) dump truck that had cost $55,000. Accumulated depreciation on the truck was $50,000.The county sold the truck at auction for $3,300.

Accumulated Depreciation…….. $50,000Net assets-Invested in CA……… 5,000

Trucks………………………………$55,000Removes asset from GCA records

GOVT WIDE GAIN/LOSS?

Book lost…$5,000VsCash received $3,300---------------------------LOSS $1,700

5. A storage building used by general government departments wasdestroyed by a tornado. The building, which cost $150,000 isexpected to be rebuilt at a cost of $200,000. The building was50% depreciated when destroyed. Construction has not begun onthe new building.

Accumulated Depreciation…….. $75,000Net Assets-Invested in CA…….. $75,000

Buildings………………………….$150,000

Need to remove destroyed building from GCA

GOV WIDE LOSS

Book lost……..$75,000VsCash received…$0---------------------------LOSS $75,000

6. The government leased a building under a capital lease agreement.The capitalizable cost was $1,200,000. The county made an initialdown payment of $100,000.

Buildings…………… $1,200,000Liability under CL……………$1,100,000Net Assets-Invested in CA……$ 100,000

Wildwood Township entered into the following transactions during 20X6:

REQUIRED: Prepare the journal entries required in the various accounts(in BOTH FUNDS and NONFUNDS)

1. The township authorized a bond issue of $5M par to financeconstruction of a fountain in the town square. The bonds wereissued for $5,120,000. Bond issue costs of $30,000 were incurredand paid. The premium, less bond issue costs, was transferred to the fund from which the debt is to be serviced.

CAPITAL PROJECTS FUNDCASH…………. $5,090,000Bond issue expenditure $30,000

OTHER FINANCING SOURCE-BONDS…..$5,000,000OTHER FINANCING SOURCE-PREM……. 120,000

OTHER FINANCING USE-TRANSFERTO DSF…………………………………….. $90,000

CASH………………………………………………..$90,000

1. continued.

DEBT SERVICE FUND

CASH………. $90,000OTHER FINANCING SOURCE-TRANSFERFROM CPF……………………………. $90,000

GCA/GLTL NONFUND

GCA-Unamortized Bond issue costs $30,000NA……………………$30,000

NET ASSETS-INVESTEDIN CAPITAL ASSETS…….. $5,120,000

BONDS PAYABLE……………….$5,000,000PREMIUM ON B/P……………… $ 120,000

2. The township entered into a contract for construction of the fountainat an estimated cost of $4,850,000.

CAPITAL PROJECTS FUND

ENCUMBRANCES……..$4,850,000RESERVE FOR ENCUMBRANCES……..$4,850,000

3. The town received and paid a $4,890,000 bill for the constructionupon completion of and approval of the fountain.

CAPITAL PROJECTS FUND

RESERVE FOR ENCUMBRANCES………$4,850,000ENCUMBRANCES………………………..$4,850,000

EXPENDITURES-CAPITAL OUTLAY……$4,890,000CASH………………………………………..$4,890,000

GCA/GLTL NONFUND

FOUNTAIN………………. $4,890,000NET ASSETS-INVESTEDIN CAPITAL ASSETS……………….$4,890,000

4. The unused bond proceeds were set aside for debt service on thebonds. Accordingly, those resources were paid to the appropriatefund.

Bond proceeds………………………….. $5,120,000-Bond premium transferred earlier…… (120,000)-Capital outlay cost……………………. (4,890,000)----------------------------------------------------------------------------NET PROCEEDS……………. $ 110,000 * The solution manual

went with $110,000 which didnot consider the bond issue costs.CAPITAL PROJECTS FUND

OTHER FINANCING USE-TRANSFER TO DSF…………… $110,000

CASH………………………………$110,000

DEBT SERVICE FUND CASH………….. $110,000OTHER FINANCING SOURCE-TRANSFER FROM CPF…………..$110,000

The City of Burton has $5 million par value of general government, general obligation bondspayable outstanding. The city has decided to DEFEASE THOSE BONDS IN SUBSTANCE.Record the following transactions in all the accounts (both in the funds and in the GCAand GLTL of the City of Burton that are affected.

1. The city issued $3 MIL of refunding bonds at par.

FUNDS NON-FUNDS

Cash.......... $3,000,000OFS-Refunding Bonds$3,000,000

Net Assets.......$3MRefunding Bonds/p....$3M

The City of Burton has $5 million par value of general government, general obligation bondspayable outstanding. The city has decided to DEFEASE THOSE BONDS IN SUBSTANCE.Record the following transactions in all the accounts (both in the funds and in the GCAand GLTL of the City of Burton that are affected.

2. The city transferred $1,850,000 from its GF to its DSF to provide the additional resources needed to defease the bonds in substance..

FUNDS NON-FUNDS

GF:OFU-Transfer $1,850,000

Cash...........$1,850,000

N/A

DSF:Cash.........$1,850,000

OFS-Transfer $1,850,000

The City of Burton has $5 million par value of general government, general obligation bondspayable outstanding. The city has decided to DEFEASE THOSE BONDS IN SUBSTANCE.Record the following transactions in all the accounts (both in the funds and in the GCAand GLTL of the City of Burton that are affected.

3. The city paid $4,850,000 into an irrevocable trust established at the FirstNational Bank of Burton to defease the bonds in substance.

FUNDS NON-FUNDS

OFU-Transfer $3,000,000Expenditure... $1,850,000

Cash.........$4,850,000

Bonds payable...$5MILNet Assets..........$5 MIL

•even tho less money was put in trust you can still defeasethe whole amount.

Prepare general journal entries to record the effects on the GCA accountsof the following transactions. They are independent of each other. AssumeSL depreciation.

1. A government leased computers with a capitalizable cost of $150,000,including $30,000 paid at the inception of the lease agreement.The lease is properly classified as a capital lease, and the computersare for the use of the government's finance and accounting division.

Computers....... $150,000Liability......... $120,000Net Assets.......$ 30,000

GCA entry

GF entry?

Computer expenditure..$150KOFS.......................$120KCash...................... $ 30K

2. A government foreclosed on land against which it had tax liensamounting to $20,000. The estimable salable value of the landis $18,500. The government decided to use the land as the sitefor a new baseball park.

Land......... $18,500Net Assets......... $18,500

GCA entry @ lower of taxes/penalties etc. or FMV

GF entry? DO THIS FIRST!

Expenditures..... $18,500Allowance for Uncollectibletax liens........... $1,500

Tax Liens Receivable...... $20,000

3. Construction costs billed during the year on a new additionto city hall totaled $8,000,000.

- $7,600,000 was paid to contractors.

Encumbrances of $10,000,000 related to the project wereoutstanding at year end.

General revenues of $3,000,000 were transferred to the CityHall Addition CPF.

The remainder of the construction costs are being financedfrom bond proceeds.

Construction in Progress......... $8,000,000Net Assets.............................$8,000,000

GCA entry

GF entry DO THIS FIRST?

Construction expenditure..$8.0MCash...........................$7.6MV/P………………….$0.4M(assume short-term)

3. Construction costs billed during the year on a new additionto city hall totaled $8,000,000.

- $7,600,000 was paid to contractors.

Encumbrances of $10,000,000 related to the project wereoutstanding at year end.

General revenues of $3,000,000 were transferred to the CityHall Addition CPF.

The remainder of the construction costs are being financedfrom bond proceeds.

NO ENTRY--Encumbrances are notrecorded in the GCA (only expenditures).GCA entry

GF DO THIS FIRST?

UFB.......... $10,000,000Encumbrances....$10,000,000

Closing entry

3. Construction costs billed during the year on a new additionto city hall totaled $8,000,000.

- $7,600,000 was paid to contractors.

Encumbrances of $10,000,000 related to the project wereoutstanding at year end.

General revenues of $3,000,000 were transferred to the CityHall Addition CPF.

The remainder of the construction costs are being financedfrom bond proceeds.

NO ENTRY--Interfund transferare not recorded in GCA.GCA entry

GF DO THIS FIRST?

Transfer to CPF.... $3MCash...................$3M

3. Construction costs billed during the year on a new additionto city hall totaled $8,000,000.

- $7,600,000 was paid to contractors.

Encumbrances of $10,000,000 related to the project wereoutstanding at year end.

General revenues of $3,000,000 were transferred to the CityHall Addition CPF.

The remainder of the construction costs are being financedfrom bond proceeds.

NO ENTRY--nothing to really record.

4. In the next year, the city hall addition in item 3 was completedat an additional cost of $9,800,000. The building was inspectedand approved, but $2,000,000 of the construction costs havenot been paid.

8,000,000 (from #3) + $9,800,000 = $17,800,000 in buildings

Buildings......... $17,800,000Construction in Progress......... $8,000,000Net Assets................................. $9,800,000

GCA entry to record completion of building

GF DO THIS FIRST?

Construction expenditure..$9.8MCash............................$7.8MV/P assume short-term $2M

5. General government equipment with an original cost of $300,000(estimated salvage zero) was sold three-fourths through itsuseful life for $65,000.

Accumulated depreciation = $300,000 x .75 = $225,000.

Net assets (book)...................... $75,000Accumulated Depreciation... $225,000

Capital Assets........................$300,000GCA entry

GF DO THIS FIRST?

Cash....... $65,000OFS-sale of equpiment........ $65,000

GAIN or LOSS?

Book vsCash

$75,000

$65,000----------($10,000) LOSS

6. A bridge was destroyed by a tornado. Its original cost was $92,000.

-Useful life 1/2 over.

Replacement cost of bridge is $250,000.

Net assets......... $46,000 (book)Acc Deprec.... $46,000

Buildings....... $92,000GCA entry

GF DO THIS FIRST?

No entry until new expendituresmade for replacement.

GOVT WIDE

Book loss……$46,000Vs.Cash received..$0-------------------------- LOSS……….. $46,000

7. A dump truck originally purchased for and used by a cityEnterprise Fund has been transferred to the streets androads department- a general government department.

The truck originally cost $80,000 and is halfway through itsestimated useful life.

Its residual value is $18,000. The FMV of truck at date of transfer is $52,000.

Accumulated depreciation = ($80,000 - $18,000) x 1/2 = $31,000

Equipment........ $80,000Accumulated Depreciation.... $31,000Net Assets................................ $49,000

GCA entry: Recorded at lower of book vs FMV

Entry for Enterprise?

Capital Contrib... $49,000Acc-Dep............... $31,000

Equipment....$80,000

not called transfer in EnterpriseFund.

GF entry first (receipt of truck)

NOTHING: ITS ALL IN GCA

Bookislower

8. Computers with an original cost of $40,000 and estimated residualvalue of $5,000 were transferred from GF departments tothe municipal golf course, which is accounted for in anEnterprise Fund. The transfer occurred at the end of the estimated useful life of the computers.

8. Computers with an original cost of $40,000 and estimated residualvalue of $5,000 were transferred from GF departments tothe municipal golf course, which is accounted for in anEnterprise Fund. The transfer occurred at the end of the estimated useful life of the computers.

- Remove capital asset from GCA and record in Proprietary at lower ofbook vs "use-value".

- Called "capital contribution" in fund statements

Accumulated Depreciation.... $35,000 (all used except for salvage)Net Assets (book)..................... 5,000

Equipment...............................$40,000GCA entry

Proprietary Fund

Equipment……. $5,000Capital Contribution…. $5,000

NO ENTRY IN GF:ALL GCA

Use-value is inextricably tied to "the physical properties of the commodity" (126); that is, the material uses to which the object can actually be put, the human needs it fulfills . MARX

Prepare general journal entries to record the effects on the GLTL accounts of the followingtransactions. The transactions are independent of one another unless otherwise noted.

1. BOND ANTICIPATION notes that meet the criteria for noncurrent treatmentwere issued to provide financing for a general government capital project.The notes were issued at face (par) value of $5,000,000.

Capital Projects Fund

Cash..........$5,000,000OFS-BANs.............$5,000,000

GLTL

Net Assets...........$5,000,000BANS....................$5,000,000

Prepare general journal entries to record the effects on the GLTL accounts of the followingtransactions. The transactions are independent of one another unless otherwise noted.

2. Special assessment bonds, guaranteed by the government matured and were paid during the year: $50,000 principal and $30,000 interest were paid.

Debt Service Fund

Principal expenditure.......$50,000Interest expenditure........ $30,000

Cash....................................$80,000

GLTL

Bonds payable..............$50,000Net Assets...........................$50,000

Prepare general journal entries to record the effects on the GLTL accounts of the followingtransactions. The transactions are independent of one another unless otherwise noted.

3. Principal and interest on the County Courthouse Serial Bonds matured during theyear. The maturing interest ($200,000) was paid from the related Debt Service Fund,but the maturing principal ($75,000) had not been paid by year end. GF revenueswere transferred to cover the interest payments.

Debt Service Fund

Interest expenditure..........$200,000Cash..................................$200,000

GLTL

Bonds payable..............$75,000Net Assets............................$75,000

Principal Expenditure.....$75,000Defaulted Bonds payable.............$75,000

This is an example of a LTL becoming DUE AND NOT PAID so itsset up as a shortterm payable.

Prepare general journal entries to record the effects on the GLTL accounts of the followingtransactions. The transactions are independent of one another unless otherwise noted.

4. General Fund expenditures accounts included a Rent Expenditures account witha balance of $200,000. Further investigation of the account indicated that thebalance resulted from the payment of $40,000 on operating leases and $160,000 of leasepayments on a capital lease (of which $90,000 was for imputed interest).

General Fund

Rent Expenditures Operating lease $40,000Rent Expenditures (Interest on CL) $90,000Rent Expenditures (Prin on CL)... $70,000

Cash....................................$200,000

GLTL

Capital Lease payable..........$70,000Net Assets....................................$70,000

Prepare general journal entries to record the effects on the GLTL accounts of the followingtransactions. The transactions are independent of one another unless otherwise noted.

5. The total general government underfunded pension liability at the beginningof the fiscal year was $14,000,000. Of this $1,500,000 was considered a fund liability.The total general government underfunded pension liability at the end of the fiscalyear was $14,500,000. Of this, $2,500,000 was considered due and payable at year end.

General Fund

Pension expenditure...........$1,000,000Current pension liability...........$1,000,000

GLTL

Pension liability...........$500,000Net Assets..........................$500,000

LONGTERM

Beg $14,000,000 - 1,500,000 current ---------------- 12,500,000

End $14,500,000 - 2,500,000 current -------------- 12,000,000

6. Advance refunding bonds ($10,000,000 par) were issued at 100. The proceeds of the refunding and $2,000,000 of previously accumulated Debt Service Fund resourceswere set aside in an irrevocable trust to defease in substance $11,500,000 of SchoolBonds.

Governmental Fund

Cash..........$10,000,000OFS-refunding bonds.............$10,000,000

OFU-payment to bond escrow agent......$10,000,000Expenditure-payment to BEA................ $2,000,000

Cash.................................................................$12,000,000

GLTL Net Assets..............$10,000,000Refunding bonds payable...........$10,000,000

Bonds payable............$11,500,000Net Assets...........................$11,500,000

7. Assume the same information as in item 6, except that the School Bonds are not defeased in substance as a result of the transaction described. (it’s a little unclear specifically

what they mean about why it wasn’t defeased... was it still set aside but it didn’t meet the requirements? did they not make the entry to set aside???)

Governmental Fund

Cash..........$10,000,000OFS-refunding bonds.............$10,000,000

OFU-payment to bond escrow agent......$10,000,000Expenditure-payment to BEA................ $2,000,000

Cash.................................................................$12,000,000

GLTL

Net Assets..............$10,000,000Refunding bonds payable...........$10,000,000

DOESN’T HAPPEN; if for some legal reason the in substance defeasancedoesn’t take place, then you aren’t supposed to roll out the LTL.

8. Computers with an original cost of $40,000 and estimated residual value of $5,000were transferred from GF departments to the municipal golf course, whichis accounted for in an Enterprise Fund. The transfer occurred at the end of the original estimated useful life of the computers.

Book value of computers

$40,000-$5,000 salvage--------------------- $35,000 book

General Fund Entry

NONE

GCA/GLGL entry

Net Assets…$5,000Acc/Dep….. $35,000

Computers….$40,000

Enterprise Fund

Computers…… $35,000Capital Contribution…$35,000