What is the solution to Chapter 8 problem 3 relating to Governmental and Nonprof
ID: 2552352 • Letter: W
Question
What is the solution to Chapter 8 problem 3 relating to Governmental and Nonprofit accounting
P8-3 (General Ledger Entries and Statements) Hatcher Village, which operates on the calendar year, issued a 5-year, 8%, $100,000 note to the Bank of Hatcher on January 5, 20X4. The proceeds of the note were recorded in a Capital Projects Fund. Interest and one-tenth of the principal are due semiannually, on January 5 and July 5, beginning July 5, 20X4. A DSF has been established to service this debt; financing will come from General Fund transfers and a small debt service tax approved several years ago. The net assets of the fund at year end are not restricted or committed.
Requireda. Prepare the general journal entries (budgetary and actual) needed to record the following transactions and events. b. Prepare a balance sheet at December 31, 20X4, and a Statement of Revenues, Expenditures, and Changes in Fund Balance for the year then ended for the DSF.
Explanation / Answer
Jouranl Entries:-
Date: 5th January
1.) Bank A/c Dr. $1,00,000
To 8% Note(Debt)/Capital Project Fund A/c $1,00,000
Date: 5th July
2.) Interest A/c Dr. $ 4,000 (1,00,000*8%*6/12)
8% Note(Debt) A/c Dr. $10,000 (1,00,000*10%)
To Bank A/c $ 14,,000
3.) Statement of Profit & Loss A/c Dr. $4,000
To interest A/c $4,000
Date: 31st December
4.) Interest A/c Dr. $ 3,889 (1,00,000*8%*175/360)
To Interest Payable A/c $ 3,889
5.) Statement of Profit & Loss A/c Dr. $ 3,889
To interest A/c $ 3,889
Statement of Revenue A/c:-
Interest Expense Dueing the Year = $ 7,889 (4,000+3,889)
Balance Sheet Position:-
8% Note (Debt) = $ 90,000 (1,00,000-10,000)
Interest Payable = $3,889
Bank Balance $ 86,000 (1,00,000-14,000)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.