ACCT. FOR GOV.&NONPROF. ENTITIES>CUSTOM
ACCT. FOR GOV.&NONPROF. ENTITIES>CUSTOM
18th Edition
ISBN: 9781307515596
Author: RECK
Publisher: MCG/CREATE
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Chapter 9, Problem 20EP

 The City of Lynnwood was recently incorporated and had the following transactions for the fiscal year ended December 31.

  1. 1. The city council adopted a General Fund budget for the fiscal year. Revenues were estimated at $2,000,000 and appropriations were $1,990,000.
  2. 2. Property taxes in the amount of $1,940,000 were levied. It is estimated that $9,000 of the taxes levied will be uncollectible.
  3. 3. A General Fund transfer of $25,000 in cash and $300,000 in equipment (with accumulated depreciation of $65,000) was made to establish a central duplicating internal service fund.
  4. 4. A citizen of Lynnwood donated marketable securities with a fair value of $800,000. The donated resources are to be maintained in perpetuity with the city using the revenue generated by the donation to finance an afterschool program for children, which is sponsored by the culture and recreation function. Revenue earned and received as of December 31 was $40,000.
  5. 5. The city’s utility fund billed the city’s General Fund $125,000 for water and sewage services. As of December 31, the General Fund had paid $124,000 of the amount billed.
  6. 6. The central duplicating fund purchased $4,500 in supplies.
  7. 7. Cash collections recorded by the general government function during the year were as follows:

Chapter 9, Problem 20EP, The City of Lynnwood was recently incorporated and had the following transactions for the fiscal , example  1

  1. 8. During the year, the internal service fund billed the city’s general government function $15,700 for duplicating services and it billed the city’s utility fund $8,100 for services.
  2. 9. The city council decided to build a city hall at an estimated cost of $5,000,000. To finance the construction, 6 percent bonds were sold at the face value of $5,000,000. A contract for $4,500,000 has been signed for the project; however, no expenditures have been incurred as of December 31.
  3. 10. The general government function issued a purchase order for $32,000 for computer equipment. When the equipment was received, a voucher for $31,900 was approved for payment and payment was made.

Required

 Prepare all journal entries to properly record each transaction for the fiscal year ended December 31. Use the following funds and government-wide activities, as necessary:

Chapter 9, Problem 20EP, The City of Lynnwood was recently incorporated and had the following transactions for the fiscal , example  2

 Each journal entry should be numbered to correspond with each transaction. Do not prepare closing entries.

  Your answer sheet should be organized as follows:

Chapter 9, Problem 20EP, The City of Lynnwood was recently incorporated and had the following transactions for the fiscal , example  3

Expert Solution & Answer
Check Mark
To determine

Prepare necessary journal entries to properly record each transaction for the fiscal year ended December 31.

Explanation of Solution

Government-wide financial statement: This statement provides a combined summary of the net position and the changes in the net position of the government.

Fund financial statement: The fund financial statement provides detail financial information on the governmental, proprietary and fiduciary activities of the primary government.

Prepare necessary journal entries to properly record each transaction for the fiscal year ended December 31.

Transaction  NumberFund or ActivityAccount TitleDebit ($)Credit ($)
1.GFEstimated Revenues2,000,000 
  Appropriations 1,990,000
  Budgetary fund balance 10,000
  (To record the general fund receipt)  
     
2.GFTaxes receivable-current1,940,000 
  Allowance for uncollectible current taxes 9,000
  Revenues 1,931,000
  (To record the  property tax levy and uncollectible portion)  
     
 GATaxes receivable- Current1,940,000 
  Allowance for uncollectible current taxes 9,000
  General revenues-property taxes 1,931,000
  (To record the amount of property tax and amount of general revenue)  
     
3.GFInterfund transfers out25,000 
  Cash 25,000
  (To record the general fund transfer)  
     
 ISFCash25,000 
  Equipment300,000 
  Accumulated Depreciation 65,000
  Interfund Transfer In 260,000
  (To record the inter-fund  Transfer In)  
     
4.PFInvestment –marketable securities800,000 
  Revenues-contributions for endowment 800,000
  (To record  the donated marketable security)  
     
  Cash40,000 
  Revenues –Investment earnings 40,000
  (To record  the revenue at the end)  
     
 PFInterfund Transfer Out40,000 
  Cash 40,000
  (To record the Inter-fund  Transfer Out)  
     
 SRFCash40,000 
  Interfund Transfers In 40,000
  (To record the Inter-fund  Transfer In)  
     
 GAInvestment –marketable securities800,000 
  General revenues-contributions for endowment 800,000
  (To record marketable securities and general revenues)  
     
  Cash40,000 
  Programs revenues-culture and recreation- operating grants and  contributions 40,000
  (To record the donation made on culture and creation)  
     
5.EFDue from other funds125,000 
  Charges for services 125,000
  (To record the general fund for sewage and water services)  
     
  Cash124,000 
  Due from other  funds 124,000
  (To record the  amount paid)  
     
 GFExpenditures125,000 
  Due from other funds 125,000
  (To  record the actual due amount)  
     
  Due from other funds124,000 
  Cash 124,000
  (To  record the funds due to other funds)  
     
 GAExpense-general government125,000 
  Internal balances 125,000
  (To record  the  internal balance)  
     
  Internal balances124,000 
  Cash 124,000
  (To record the cash settlement)  
     
6.ISF & GAInventory of supplies4,500 
  Cash 4,500
  (To record the purchase of  central duplicating fund)  
     
7.GFCash1,988,000 
  Taxes receivable-current 1,925,000
  Revenues 63,000
  (To record the cash collection)  
     
 GACash1,988,000 
  Taxes receivable-current 1,925,000
  Program revenue-general government-charges for services 63,000
  (To record the cash collection)  
     
8.ISFDue from other funds23,800 
  Billings to departments 23,800
  (To record the total funds due from department)  
     
 EFExpense-administrative8,100 
  Due to other funds 8,100
  (To  record the City’s utility fund)  
     
 GFExpenditures-General government15,700 
  Due to other funds 15,700
  (To record  the  internal service fund)  
     
 GAInternal balances8,100 
  Program revenues-general government-charges for services 8,100
  (To  record  the  government charges for service)  
     
9.CPFCash5,000,000 
  Proceeds  of bonds 5,000,000
  (To record the sale of  bond)  
     
  Encumbrance4,500,000 
  Encumbrances outstanding 4,500,000
  (To  record the amount of contract)  
     
 GACash5,000,000 
  Bond payable 5,000,000
  (To record the  cash receipt on bond)  
     
10.GFEncumbrance32,000 
  Encumbrances outstanding 32,000
  (To record the issue of purchase order)  
     
  Encumbrance Outstanding32,000 
  Expenditures31,900 
  Encumbrances 32,000
  Cash 31,900
  (To record the  cash payment  of purchase)  
     
 GAEquipment31,900 
  Cash 31,900
  (To record the purchase of  equipment  on cash)  

(Table 1)

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