A budget is passed for all ongoing activities. Revenue is anticipated to be $1,0
ID: 2485082 • Letter: A
Question
A budget is passed for all ongoing activities. Revenue is anticipated to be $1,029,000 with approved spending of $630,000 and operating transfers out of $324,000.
A contract is signed with a construction company to build a new central office building for the government at a cost of $6.2 million. A budget for this project has previously been recorded.
The new building is completed. An invoice for $6.2 million is received and paid.
A portion of the bonds comes due and $1.15 million is paid. Of this total, $155,000 represents interest. The interest had not been previously accrued.
Citizens' property tax levies are assessed. Total billing for this tax is $765,000. On this date, the assessment is a legally enforceable claim according to the laws of this state. The money to be received is designated for the current period and 90% is assumed to be collectible in this period with receipt of an additional 6% during subsequent periods but in time to be available to pay current period claims. The remainder is expected to be uncollectible.
The county received investments valued at $345,000 as a donation from a grateful citizen. Income from these investments must be used to beautify local parks.
Prepare these entries for government-wide financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars not in millions.)
7. (Transaction g.) Record property taxes collectible -Governmental Activities
8. (Transaction h.) Record cash received from toll road -Governmental Activities
9. (Transaction i.) Record donations received -Governmental Activities
Explanation / Answer
7. Total property tax receivable has to be recorded as income and further provision has to be made for non-collectible amount. Net transaction should not be accounted. Also, income and receivable to be recognised in the year it is receivable irrespective of when it ll be received ie current period or subsequent. Hence the entries would be:
a. Total receivable
Property taxes receivable (Asset) Dr 765,000
To Property Tax (Income) Cr 765,000
b. Provision to be made for taxes which are known as non-collectible 100%-90%-6% = 4% of $ 765,000
Non-collectible taxes (expense) Dr 30,600
To Provision for property taxes receivable (Asset) Cr 30,600
8. Cash is received from toll collections - this will be an income. However the cash has restricted usuage, hence we need to reflect the same seperately.
Restricted Cash (Asset) Dr. 173,000
To Toll Collections (Income) Cr. 173,000
9. For the donation received, the asset and the corresponding income needs to be recognised.
Investments A/c (Asset) Dr. 345,000
To Donations (Income) 345,000
Kindly let me know for any clarifiaction
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