Accounting For Governmental & Nonprofit Entities
18th Edition
ISBN: 9781259917059
Author: RECK, Jacqueline L., Lowensohn, Suzanne L., NEELY, Daniel G.
Publisher: Mcgraw-hill Education,
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Question
Chapter 6, Problem 17.5EP
To determine
Identify the statement that would be included in debt service fund budgeting entries.
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Students have asked these similar questions
An expenditure for general obligation long-term debt is always recorded at year-end in the governmental funds fora. accrued interest and accrued principal.b. accrued principal but not accrued interest.c. accrued interest but not accrued principal.d. neither accrued interest nor accrued principal.
Which of the following statements is false?
Unmatured principal installments and accrued interest which is due shortly after year end are required to be reported as liabilities in the debt service fund at year end.
An encumbrance in a capital project fund is created when the contract for the work is signed or issued.
Premiums generated from the issuance of bonds for a capital projects fund are generally transferred to the Debt Service Fund.
If taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized as revenues of the Debt Service Fund.
f. Prepare the budgetary entries for 2023 assuming that the bonds were scheduled to be issued on January 2. Assume that the
January 1, 2024, principal and interest payments will be included in the 2023 budget. Prepare the entry required to reflect the
transfer of funds from the General Fund to the debt service fund. (You may ignore the entry in the General Fund.) (If no entry is
required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate
calculations.)
Transaction
Fund
1. Record the budget transaction.
Debt Service Fund
1
2. Record the transfer of funds.
2
Answer is complete but not entirely correct.
General Journal
Estimated Other Financing Sources-Transfers In
Appropriations
Debit
Credit
142,500
142,500
Debt Service Fund
Cash
23,750
Other Financing Sources-Interfund Transfers In
23,750
Chapter 6 Solutions
Accounting For Governmental & Nonprofit Entities
Ch. 6 - Prob. 1QCh. 6 - What disclosures about long-term liabilities are...Ch. 6 - Prob. 3QCh. 6 - Prob. 4QCh. 6 - Although the most common type of general long-term...Ch. 6 - What is overlapping debt? Why would a citizen care...Ch. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - How are debt issuance costs accounted for at the...Ch. 6 - Under what circumstances might a government...
Ch. 6 - Prob. 11CCh. 6 - A citizens group in your state has placed an...Ch. 6 - A county government and a legally separate...Ch. 6 - Prob. 14CCh. 6 - Evaluating Legal Debt Margins. (LO6-2) Youll be...Ch. 6 - Prob. 17.1EPCh. 6 - Proceeds from bonds issued to construct a new city...Ch. 6 - The liability for long-term debt issued to finance...Ch. 6 - Which one of the following statements regarding...Ch. 6 - Prob. 17.5EPCh. 6 - On March 2, 2020, 20-year, 6 percent, general...Ch. 6 - Prob. 17.7EPCh. 6 - Prob. 17.8EPCh. 6 - The liability for special assessment bonds for...Ch. 6 - Total general long-term indebtedness subject to...Ch. 6 - Payment of general obligation bond interest would...Ch. 6 - Debt issuance costs a. Include legal and...Ch. 6 - If bonds are sold at a premium: a. The premium is...Ch. 6 - Prob. 17.14EPCh. 6 - Prob. 17.15EPCh. 6 - Prob. 18EPCh. 6 - Budgeted and Actual Debt Service Transactions....Ch. 6 - Lease Agreement. (LO6-5) McCormick County agreed...Ch. 6 - Legal Debt Margin and Direct and Overlapping Debt....Ch. 6 - Debt Service Fund Trial Balance. (LO6-5) Following...Ch. 6 - Prob. 23EPCh. 6 - Term Bond Debt Service Fund Transactions. (LO6-5)...Ch. 6 - Prob. 25EP
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- Encumbrances outstanding at year-end in a state’s general fund should be reported as a a. liability in the general fund. b. fund balance reserve in the general fund. c. liability in the general long-term debt account group. d. fund balance designation in the general fund.arrow_forwardThe general fund pays rent for two months. Which of the following is not correct? Choose the correct.a. Rent expense should be reported in the government-wide financial statements.b. Rent expense should be reported in the general fund.c. An expenditure should be reported in the fund financial statements.d. If one month of rent is in the first year with the other month in the next year, either the purchases method or the consumption method can be used in fund statements.arrow_forward"The sum of fund balance in the beginning of the year and estimated revenues are less than the Appropriations". Does it amount to: O a. Compliance to state balance budget laws O b. Violation of state balance budget laws O c. Balanced budget d. None of the abovearrow_forward
- The general fund pays rent for two months. Which of the following is not correct? Rent expense should be reported in the government-wide financial statements. Rent expense should be reported in the general fund. An expenditure should be reported in the fund financial statements. If one month of rent is in the first year with the other month in the next year, either the purchases method or the consumption method can be used in fund statements.arrow_forwardVouchers payable denote: a. A future liability estimated when order is made b. Amount due to government from user charges c. A liability incurred when goods/services are received d. Amount payable by government on long term debts Question 2 Question text Which of the following is not an example of the function of an Agency Fund? a. Collection of property tax by one government unit for the other b. All the options listed c. Payment of interest and principle on long-term debt d. Collection of local government sales taxes by the state governmentarrow_forwardRevenues that are legally restricted to expenditures for specified purposes should be accounted for in special revenue funds, includinga. accumulation of resources for payment of general long-term debt principal and interest.b. pension trust fund revenues.c. gasoline taxes to finance road repairs.d. proprietary fund revenues.arrow_forward
- What would be the appropriate account title for funds collected by a sales tax custodial fund? A. Sales tax revenue B. Other financing sources C. Additions-tax collections for other governments D. Sales taxes receivablearrow_forwardWhich of the following neither increases nor decreases fund balance of the General Fund during the current period? a. Revenues. b. Other financing sources. c. Deferred revenues. d. Expenditures.arrow_forwardA local government has the following transactions during the current fiscal period. Prepare journal entries without dollar amounts, first for fund financial statements and then for government-wide financial statements.a. The budget for the police department, ambulance service, and other ongoing activities is passed. Funding is from property taxes, transfers, and bond proceeds. All monetary outflows will be for expenses and fixed assets. A deficit is projected.b. A bond is issued at face value to fund the construction of a new municipal building. c. A computer is ordered for the tax department.d. The computer is received.e. The invoice for the computer is paid.f. The city council agrees to transfer money from the general fund as partial payment for a special assessments project but has not yet done so. The city will be secondarily liable for any money borrowed for this work.g. The city council creates a motor pool to service all government vehicles.…arrow_forward
- 3. Which of the following accounts appears on both the interim and year-end balance sheets of the General Fund? a) Revenues. b) Reserve for encumbrances. c) Encumbrances. d) Appropriations. 4. Which of the following would be considered a general capital asset? a) A vehicle purchased from general fund revenues. b) A vehicle purchased and maintained by an enterprise fund. c) A computer purchased from revenues of an internal service fund and used by the supplies department. d) Real estate purchased with the assets of a pension trust fund. 5. A machine is sold for $500. It had originally been purchased for $8,000 using GF It is fully depreciated. Gain on sale of equipment account revenues. should be recorded in the General fund journal as: a) Debit in 500S. b) Credit in 500$. c) Credit in 7500S. d) Gain on sale of equipment account will not recorded in general fund journal. Question Three: mini casesarrow_forwardWhen 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).arrow_forwardIn approving the budget of the City of Troy, the city council appropriated an amount less than expected revenues, what will be the result of this action .a An increase in outstanding encumbrances by the of the fiscal year .b A credit to budgetary fund balance .C A debit to budgetary fund balance .d A necessity for compensatory offsetting action in the debt service fundarrow_forward
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