On the same date the state announced a $10 million grant to another school distr
ID: 2492519 • Letter: O
Question
On the same date the state announced a $10 million grant to another school district for the acquisition of equipment. However, per the provisions of this grant the state will make payments only upon receiving documentation from the district that it has incurred allowable costs. In fiscal 2013, the district incurred and documented allowable costs of $8 million. Of this, the state paid only $7 million, expecting to reimburse the district for the balance early in fiscal 2014.
a.Prepare the journal entries that the state would make in fiscal 2013 to record the awards in an appropriate governmental fund. Briefly justify the amount of expenditure that you recognized.
b.What, if any, adjustment to the amount of expenditure recognized would the state have to make in preparing its government-wide statements?
c.Describe briefly how the recipients would account, in both fund and government-wide statements for the awards.
Explanation / Answer
Solution-a
S. No.
Accounts Titles & Explanation
Debit
Credit
1.
Grant Expenditure
$2,000,000
Cash
$2,000,000
2.
Grant Expenditure
$8,000,000
Cash
$7,000,000
Grant Payable
$1,000,000
3.
Grant Expenditure
$1,000,000
Cash
$1,000,000
4.
Advance Payment
$100,000
Cash
$100,000
Solution-b
In preparing its government wide statements, the state would have several adjustments to make in its accounting system for the fiscal year 2013.
Solution-c
The account for the state of money used by the racipients in many ways its depands upon how the money distributed. If we analyse the scenario one than the school district shows in the year 2013 (fiscal year) they received and spend the 1.5 millions from the state with balance amount of .5 million to be spens in 2014.
S. No.
Accounts Titles & Explanation
Debit
Credit
1.
Grant Expenditure
$2,000,000
Cash
$2,000,000
2.
Grant Expenditure
$8,000,000
Cash
$7,000,000
Grant Payable
$1,000,000
3.
Grant Expenditure
$1,000,000
Cash
$1,000,000
4.
Advance Payment
$100,000
Cash
$100,000
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