Section 2: Journal Entries (20 points) As of July 1, 2016, the City of Saratoga

Question

Section 2: Journal Entries (20 points) As of July 1, 2016, the City of Saratoga Springs decided to purchase a privately operated swimming pool and to create a swimming pool fund. During the year, the following transactions occurred: (a) $1,000,000 was borrowed with a note payable from a local bank at an interest rate of 6%, (b) Purchased the following items in cash: a. Land b. Building e. Land improvements $400,000 d. Equipment e. Supplies $300,000 $400,000 $200,000 $190,000 (c) Charges for services amounted to $600,000, all received in cash. (d) Depreciation was recorded for the followings in the amounts specified below a. Building b. Land improvements$40,000 c. Equipment $20,000 S20,000 1. In what fund does this need to be accounted for? (Name the fund.) (4 points) When converted to government wide financial statements, in which column should this fund be included? (4 points) Journal entries ( points each)

Explanation / Answer

SOLUTION:

Debit Credit 1 Cash 100,000 Note payable 100,000 2 Land 300,000 Building 400,000 Land Improvement 400,000 Equipment 200,000 Supplies 190,000 Cash 1,490,000 3 Cash 600,000 Operating revenue- charge for services 600,000 4 Operating expense-Depreciation 80,000 Accumulated depreciation - Building 20,000 Accumulated depreciation - Land Improvement 40,000 Accumulated depreciation - Equipment 20,000

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