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Vera_Pavlovna [14]
3 years ago
9

The following transactions relate to the City of Middleton, which has a fiscal year end of December 31. The city adopts budgets

for the General Fund and the debt service fund. NOTE: for simplicity, and contrary to GASB standards, assume straight-line amortization for this problem.
1. The City of Middleton sells a $2,000,000, 3%, 16-year general obligation bond issue on January 2 at par. The bond pays interest semi-annually on July 1 and January 2, with the first principal payment scheduled for next year on January 2. A city hall annex must be constructed with the bond proceeds. The bond premium must be used to pay interest on the debt.
2. Budgets are adjusted to account for the sale of the bond. The debt service fund budget should be adjusted to accommodate the new debt issue. If the debt service fund does not have sufficient resources to pay expenditures, the needed funds will be provided by the General Fund.
3. On February 1, $1,000,000 of the cash from the sale of the bonds is invested for one year at a rate of 1.26%. Earnings on the investment are available for construction of the city hall annex.
4. July 1 the first interest payment is due.
5. December 31 adjusting entries are prepared.

Required:
For the five related transactions provided, prepare journal entries for the affected funds and at the govemmental activities level.
Business
1 answer:
scoundrel [369]3 years ago
4 0

Answer:

See explaination

Explanation:

1.

--Capital projects fund journal

Dr. Cash $2,000,000

Cr. Other Financing Source—Proceeds of Bonds $2,000,000

--Governmental activities journal

Dr. Cash $2,000,000

Cr. Bonds Payable $2,000,000

2.

--Debt service fund journal

Dr. Estimated Other Financing Sources—Inter fund Transfers In $ 30,000

Cr. Appropriations $ 30,000

--General Fund journal

Dr. Budgetary Fund Balance $ 30,000

Cr. Estimated Other Financing Uses—Inter fund Transfers Out $ 30,000

3.

--Capital projects fund journal

Dr. Investments $1,000,000

Cr. Cash $1,000,000

--Governmental activities journal

Dr. Investments $1,000,000

Cr. Cash $1,000,000

4.

4.

--General Fund journal

Dr. Other Financing Uses—Inter fund Transfer out $ 30,000

Cr. Cash $ 30,000

--Debt service fund journal

a) Dr. Cash $ 30,000

Cr. Other Financing Sources—Inter fund Transfer In $ 30,000

b) Dr. Expenditures—Interest $ 30,000

Cr. Cash $ 30,000

--Governmental activities journal

Dr. Expenses—Interest on Long-term Debt $ 30,000

Cr. Cash $ 30,000

5.

--Capital projects fund

Dr. Interest Receivable $ 11,555

Cr. Revenues—(optional to put source, Interest) $ 11,555

--Governmental activities journal

a) Dr. Interest Receivable $ 11,555

Cr. General Revenues—Investment Earnings—(optional to indicate restriction, Restricted for Capital Projects) $ 11,555

b) Expenses—Interest on Long-term Debt $ 30,000

Interest Payable $ 30,000

Debt service fund

Note that there is no accrual of interest expenditure since the expenditure is not legally due until after the first of the year.

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Answer:

(C) actual amounts from different years are compared.

Explanation:

Budgets are used for control. To compare the performace is necessary to have a same period, with almost the same characteristics and evaluate the actual performance. In sales for example, the bussineses has different seasons around the year, and because some sociodemographic reasons.

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3 years ago
Richard has $652 in his account and is planning a road trip. He looks at how expensive hotels and sightseeing costs are in certa
Cloud [144]

Answer:

The answer is: Detroit  $196.87

Explanation:

We first must add the cost of visiting the five cities:

Detroit            $196.87

Pittsburgh      $180.32

St. Paul          $102.87

Cincinnati      $155.81

<u>Richmond      $211.86      </u>

Total cost     $847.73

Then we find what is the difference between the total cost and the road trip budget: $847.73 - $652 = $195.73

The cheapest city that Richard can drop is Detroit, by doing so his total expenses will be $650.86, which is below his budget.

4 0
3 years ago
Read 2 more answers
Suppose that a bank has loaned money to two businesses: a trustworthy computer manufacturer and a risky mining venture. Unfortun
Vladimir [108]

Answer:

The situation is called insolvency. bank is unable to pay to depositor.

Explanation:

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Insolvency is refer to that critical condition when debtor unable to pay amount to depositor. In the above given case even if bank want to sell its all assets it cannot cover its liabilities.

3 0
3 years ago
St. Vincent's, Inc., currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on t
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The overhead cost that should be allocated to Zeta via activity-based costing is $356,000.

The following formula for determining the overhead cost allocated to Zeta:

= Zeta pool no 1 ÷ total pool no 1 × pool cost + zeta pool no 2 ÷ total pool no 2 × pool cost + zeta pool no 3 ÷ total pool no 3 × pool cost

= 2,800 ÷ 4,000 × $160,000 + 55 ÷ 100 × $280,000 + 750 ÷ 3,000 x $360,000

= $356,000

Therefore we can conclude that the overhead cost that should be allocated to Zeta via activity-based costing is $356,000.

Learn more about the overhead here: brainly.com/question/11950737

6 0
2 years ago
An employee earns $5,550 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400
Klio2033 [76]

Answer:

$4,713.425

Explanation:

The computation of amount of net pay for the employee for the month of January is shown below:-

Deductions = (Gross earning × Social security tax rate) + (Gross earning × Medicare tax rate) + Federal income taxes + Health insurance + Contribution of retirement plan

=  ($5,550 × 6.2%) + ($5,550 × 1.45%) + $184 + $152 + $76

= $344.1 + $80.475 + $184 + $152 + $76

= $836.575

Net pay = Gross earning - Deductions

= $5,550 -  $836.575

= $4,713.425

Therefore for computing the net pay we simply applied the above formula.

3 0
3 years ago
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