Governmental, Not-for-Profit Accounting

EX. 7-3

General capital assets are accounted for differently in fund and government-wide financial statements.

A city engaged in the following transactions during a year:

1. It acquired computer equipment at a cost of $40,000.
2. It completed construction of a new jail, incurring $245,000 in new costs. In the previous year the city had incurred $5 million in construction costs. The project was accounted for in a capital projects fund.
3. It sold for $16,000 land that it had acquired three years earlier for $28,000.
4. It traded in a four-year-old sanitation department vehicle for a new model. The old vehicle had initially cost $27,000, its carrying value at the time of trade was $17,000, and its market value was $13,000. The city paid an additional $39,000 cash for the new model. The fair value of the new model was $52,000.

1. Prepare journal entries to reflect the transactions in an appropriate governmental fund (e.g., a general fund or a capital projects fund).
2. Prepare journal entries to reflect the transactions in the citys government-wide statements.