A city received two state grants in fiscal 2018. The first was an award for a maximum of $800,000, over a two-year period, to reimburse the city for 40 percent of specified costs incurred to operate a job opportunity program. During 2018, the city incurred allowable costs of $1.4 million (paid in cash) on the program. It was reimbursed for $500,000 and anticipates that it will receive the balance of what it is owed for 2018 early in fiscal 2019.
The second was an award of $600,000, also to cover a two-year period, to assist the city in administering a day care program. Granted only to selected cities, the award was based on several criteria, including the quality of the program and need for assistance. The amount was calculated as a percentage of the funds incurred by the city on the program in the prior year. Although the award must be spent on the day care program, there are no specific matching requirements. During the year the city received the entire $600,000. It spent $550,000 (in cash) on the program.
1. Prepare entries to summarize the grant activity during 2018.
2. In a few sentences, justify any differences in your approach to the two grants.