1- Why is depreciation not recorded in governmental type funds?
2- In its General Fund balance sheet at December 31, 2015, Abbotsford City reported Property taxes receivable of $40,000, deferred property tax revenues of $15,000, and an allowance for uncollectible taxes of $0. At the start of the year 2016, Abbotsford City made the following journal entry to record its property tax levy:
Property taxes receivable 950,000
Allowance for refunds and uncollectible taxes 10,000
Revenues - property taxes 940,000
During the year 2016, the city collected all the property taxes receivable outstanding at December 31, 2015. It also collected $920,000 of the receivables recognized at the beginning of 2016, and wrote off $6,000 of receivables against the allowance account. On December 31, 2016, the Abbotsford City finance director made the following determinations regarding the property taxes outstanding at that date:
a. All outstanding property taxes would be collected, so there was no need for the allowance for uncollectible property taxes.
b. The City would collect about $15,000 of the outstanding property taxes receivable during the first 60 days of 2017 and the remainder during the latter part of 2017.
Required: Calculate how much property tax revenues Abbotsford City should recognize in 2016.
3- Prepare entries to record the following transactions related to acquisition of capital assets by a city.
Remark: The city does not use encumbrance accounting.
Identify the fund(s) used.
a. The city issues general obligation bonds in the amount of $900,000, receiving cash for the full face amount of the bonds. The cash will be used to buy capital assets.
b. The city buys a prefabricated building for $750,000, using part of the bond proceeds. The building is delivered and the invoice for the building is approved.
c. The invoice approved in b. is paid.
d. The General Fund transfers cash of $55,000 to another fund in anticipation of the payment of the first installment of interest ($30,000) and principal ($25,000) on the debt.
e. The first installment of debt service on bonds issued in a. becomes due and payable.
f. Debt service on the bonds issued in a. is paid.