Questions:
1) During the fiscal year ended 6/30/07, the City of Hartsville engaged in the following transactions.
REQUIRED: Assuming the city maintains its books and records in the manner that facilitates the preparation if its governmental fund financial statements, prepare all necessary journal entries that the city should make for each transaction. Clearly indicate in which fund the entry is being made. If no entry is being made. If no entry in required, write no entry required .
a) In July 2006, the City issued $20 million in 6% general obligation term bonds to finance construction of a new building to house City offices. The bonds were issued at a premium of $200,000.
b) In September 2006, the City transferred $1 million from the general fund to cover the $.6 million principal and $.4 million interest payments due that month on debt issued in previous years.
c) In September 2006, the City paid the principal and interest due from (b).
d) In June 2007, the City transferred $2 million from the General Fund to cover the $1.2 million interest payment and the $.8 million principal payment due in July 2007 on the bonds issued in (a).
2) Benton County voted to establish an internal service fund to account for printing and copying for all its departments and agencies.
The County engaged in the following activities related to the new fund. REQUIRED: Prepare transactions to record these events in internal service fund. If no entry is required, write No entry required .
a) The Country Commission voted to transfer $200,000 from the General Fund to the internal service fund to establish the new fund.
b) The fund entered into a capital lease for equipment used in printing activities. The total present value of the lease obligation is $600,000.
c) Issued $1 million in general obligation bonds at 101. The bonds were issued to acquire additional equipment. The bonds are to be serviced from the internal service fund.
d) Purchased equipment at a cost of $980,000. The equipment has an estimated useful life of nine years and an estimated salvage value of $80,000.
e) Billed the General Fund for copying and printing charges, $70,000.
f) Paid salaries to printing employees, $50,000.
3) The voters of Salt Lake City authorized the construction of a new north-south expressway for a total cost of no more that $75 million. The voters also approved the issuance of $50 million of 5% general obligation bonds. The balance necessary funds will come from the following sources: $15 million from a federal grant and $10 million from a state grant. The City controls expenditures capital project funds through project management. The City does not formally incorporate budgetary entries in the capital projects fund but it does use encumbrance accounting for control purposes. REQUIRED: Assuming the City maintains its books and records in a manner that facilitates the preparation of the fund financial statements, prepare journal entries, in the Capital Projects Fund, for the following transactions.
a) The City issued $50 million of 5% general obligation bonds at 101.
b) The City transferred the premium to the appropriate fund.
c) The City incurred bid-related expenditures of $1,000.
d) The City signed a contract with the lowest competent bidder for $48 million.
e) The City received notice from the State that the grant had been approved and the proceeds will be forwarded to the City in the State s current fiscal year.
f) The City received the federal grant in full.
g) The City received a progress billing from the contractor for $10 million. The City pays the billing.