Governmental and Nonprofit Accounting (11th Edition)
11th Edition
ISBN: 9780133799569
Author: Robert J. Freeman, Craig D. Shoulders, Dwayne N. McSwain, Robert B. Scott
Publisher: PEARSON
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Textbook Question
Chapter 4, Problem 2.3E
A state borrowed $10,000,000 on a 9-month, 9% note payable to provide temporary financing for the General Fund. At year end, the note has been outstanding for 6 months. The state should report General Fund interest expenditures and interest payable on the short-term note in its financial statements of
- a. $0; the interest will be recognized when it matures.
- b. $450,000.
- c. $450,000, unless the state does not expect to be able to pay the interest when it matures.
- d. $675,000.
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3. On the last day of the calendar year, the City of Soccerton borrowed $400,000 from the local
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A $110,000 payment is made on a long-term liability. Of this amount, $10,000 represents interest. Which of the following is true for the recording of this transaction?
Reduce liabilities by $100,000 in the government-wide financial statements.
Record a $110,000 expenditure in the fund financial statements.
Reduce liabilities by $100,000 in the fund financial statements.
Recognize $10,000 interest expense in the government-wide financial statements.
When preparing government-wide financial statements, the modified accrual based governments funds are adjusted. Please show the adjustments (in journal entry form with debits and credits) that would be made for the following General Fund transactions when converting to the government-wide statements:
3. $10,000 in interest was due and paid on that revenue bond during the fiscal year ($5,000 due every six months).
Chapter 4 Solutions
Governmental and Nonprofit Accounting (11th Edition)
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