Question

A city orders a new computer for its General Fund at an anticipated cost of $93,000. Its actual cost when received is $94,460. Payment is subsequently made. a. Prepare all required journal entries for both fund and government-wide financial statements. (Select the appropriate fund for each situation when required. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

The Journal entries for the Fund based Financial Statement and the Government wide financial statement are in the explanation.

Explanation:

Well, first there is the need to know that the Government Authority Standard Board mandates that government organisations keep two financial statements. The first is the Government-wide financial statement and the second is the fund-based financial statement.

The fund based Financial Statements- General Fund

S/N                              Description                           Debit ($)    Credit ($)

1.              Computer - Encumbrances Control       93,000

                         Outstanding Encumbrances                             93,000

Being the payment for Computer received

2.               Outstanding Encumbrances                   93,000

                     Computer- Encumbrances control                        93,000

Being the removal of encumbrance for received computer

3.                 Computer- Expenditures Control         94,460

                       Vouchers payable                                                 94,460

Being the receipt of a new computer and its liability

4.                       Voucher Payable                              94,460

                                Cash                                                               94,460

Being the payment for the computer and its liability

It should be noted the encumbrance control account was created because the computer was received but payment was made at a later date.

Government Wide Financial Statement- Government Activities

S/N                              Description                           Debit ($)    Credit ($)

1.             There is no entry required to record the order of the computer

                         

2.               Computers                                             94,460

                    Vouchers Payable                                                  94,460

Being the record of computers received and its liability

3.                Voucher Payable                                   94,460

                      Cash                                                                         94,460

Being the record of payment made for the computer