Problem 1-
The Kingwood Regional School District engaged in or was affected by the following events and transactions during its ?scal year ending June 30, 2015.
1. Teachers and other personnel earned $700,000 in vacations and other compensated absences that they did not take but for which they expect to be paid in the future.
2. The district settled a suit brought by a student, agreeing to pay $6 million by December 31, 2016.
3. Thedistrictissued$16millioninGObondsto?nanceanAddition to its high school. By year-end, it had expended $2 million in construction costs.
4. The district signed a three-year lease for of?ce space. Annual rent is $60,000 per year.
5. It acquired school buses and other vehicles, ?nancing them with an eight-year capital lease. Annual lease payments are $280,000. Had the district purchased the equipment outright, the price would have been $1,738,742 (rounded), re?ecting an interest rate of 6 percent.
6. The district transferred $1,000,000, representing the ?nal year's principal payment, to a reserve fund required by the bond indenture.
7. To smooth out cash ?ows, the district issued 90-day tax anticipation notes of $1,900,000
8. The district paid teachers and other personnel $300,000 for compensated absences earned in previous years.
a. For each event, prepare the entries (as required) to record the transactions in the general fund or whatever other governmental fund seems most appropriate.
b. Prepare the entries that would be needed to re?ect the transactions and events in the district's government-wide statements.
Problem 2
New Durham Township assessed property owners $2,000,000 to construct sidewalks. The assessments were payable over a period of ten years in annual installments of $246,580, an amount that re?ects interest at a rate of 4 percent.
To fund the improvements the city issued $2,000,000 of ten-year, 4 percent bonds. The bonds were sold to yield interest of 3.8 percent (1.9 percent per period) and were thereby sold at a premium of $33,020 (i.e., at a total of $2,033,020). The township transferred the premium to an appropriate fund. Interest on the bonds is payable semiannually (i.e., $40,000 each six months).
In as much as the amounts to be received from the property owners are not coincident with the required payments to bondholders, the township will invest all available cash, and any assets that remain after the bonds have been repaid will be transferred to the general fund.
In the same year that the township assessed the property owners and issued the notes, it constructed the sidewalks at a cost of $2,000,000. During that year it made one payment of interest on the bonds and collected one installment from the property owners. It invested $239,600 in U.S. Treasury notes-the difference of $206,580 between the assessments received and the interest paid, plus the $33,020 bond premium. It earned $6,000 (cash) interest on these securities.
Assume that the township recognized one full year'sinterest on the assessments receivable and that it recorded
1. Prepare summary journal entries in all appropriatefunds.
2. Prepare alternative journal entries to re?ect how thetransactions would be recorded in the township'sgovernment-wide statements.