Question

The following proceeds received by Grove City in year 1 are legally restricted to expenditure for specified purposes: Donation by a benefactor mandated to a permanent fund to provide funds, the income of which is to provide meals for the needy (a government program) $300,000 Sales taxes to finance the maintenance of tourist facilities in the shopping district 900,000 What amount should be accounted for in Grove’s special revenue funds?

Answer 1

Answer:

The $1,200,000 should be accounted for in Grove’s special revenue funds

Explanation:

Special revenue fund: The special revenue fund is a fund that is introduced by the government to collect the money from the public. It is made to fulfill the need for specific purposes/ projects.  

The computation of special revenue funds is shown below:

= Income received for providing the meals to the needy people + financing of sales tax with respect to tourist facilities maintenance in the shopping district

= $300,000 + $900,000

= $1,200,000