Posted: January 20th, 2016

Government and Not-For-Profit Accounting Portfolio #1

P. 2-6: The nature of a transaction gives a clue as to the type of fund in which it should be recorded. (80 points)

Scenario 1:
Kendal County engaged in the following transactions:
•It levied and collected $1million in taxes dedicated to the repayment of outstanding general obligation bonds.
•It billed sponsors of a charity bicycle ride $5,000 for providing police patrols during the ride.
•It recognized $60,000 of cash dividends on investments dedicated to the support of a county arts center.
•It recognized $70,000 of cash dividends on investments dedicated to scholarships for needy county residents.
•It incurred $6 million in construction costs to complete a new county jail. The new jail was funded entirely with the proceeds of long-term bonds.
•It transferred $400,000 of unrestricted funds to an appropriate fund to be invested and eventually used to repay the principal on the long-term jail bonds (entries in two funds required).
•It recognized depreciation of $100,000 on equipment in a vehicle repair center that services all county departments that have motor vehicles.
•It collected $30,000 in parking fees at the county-owned garage.
•It issued $8 million in bonds to improve the city-owned electric utility.
•It distributed $3 million in taxes collected on behalf of school districts located within the country.

Instructions:
1.Prepare appropriate journal entries.
2.Indicate the type of funds in which these transactions would most likely be recorded.

P. 5-4: Generally accepted modified accrual accounting practices pertaining to inventories may not fulfill the objectives of financial reporting. (80 points)