Question
For each of the following indicate the amount of revenue that Beanville should recognize in its 2017 (1) government-wide statements and (2) governmental fund statements.
For each of the following indicate the amount of revenue that Beanville should recognize in its 2017 (1) government-wide statements and (2) governmental fund statements. Provide a brief justification or explanation for your responses.
1. The state in which Beanville is located collects sales taxes for its cities and other local governments. The state permits small merchants to remit sales taxes quarterly. The state sales tax rate is 6 percent. In December 2016, city merchants collected $50 million in sales taxes that they remitted to the state on January 15, 2017. The state, in turn, transferred the taxes to the city on February 15, 2017. Recognizing Revenues in Governmental Funds
2. In December 2016, the federal government awarded the Bernville a reimbursement grant of $500,000 to train law-enforcement agents. The city had applied for the grant in January of that year. The city may incur allowable costs any time after receiving notification of the award. In 2017, the city incurred $400,000 in allowable costs and was reimbursed for $350,000. It was reimbursed for the $50,000 balance in February 2018. In January and February 2018, it incurred the remaining $100,000 in allow- able costs and was reimbursed for them in April 2018.
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