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PROBLEM 18-6 Journal EntriesIdentify the Fund The following activities and transactions are typical of those that may affect the various funds used by a typical
PROBLEM 18-6 Journal EntriesIdentify the Fund | ||||||||
The following activities and transactions are typical of those that may affect the various funds used by a typical | ||||||||
municipal government. | ||||||||
Required: | ||||||||
Prepare journal entries to record each transaction and identify the fund in which each entry is recorded. | ||||||||
A. The Greenville City Council passed a resolution approving a general operating budget of $5,000,000 for the | ||||||||
fiscal year 2015. Total revenues are estimated at $4,900,000. | ||||||||
B. The Greenville City Council Passed an ordinance providing a property tax levy of $6.25 per $100 of assessed | ||||||||
valuation for the fiscal year 2015. Total property valuation in Greenville City is $204,800,000. Property is assessed | ||||||||
at 25% of current property valuation. Property tax bills are mailed to property owners. An estimated | ||||||||
3% will be uncollectible. | ||||||||
C. Reed City sold a general obligation term bond issue for $1,000,000 at 105 to a major brokerage firm. The | ||||||||
stated interest rate is 5%. Proceeds are to be used for construction of a new Central Law Enforcement Building. | ||||||||
(Note: Entries are required in the Capital Project Fund). | ||||||||
D. The premium on bond sale in (C) above is transferred to the Debt Service Fund. | ||||||||
E. At the end of fiscal year 2015, the Greenville City Council approves the write-off of $52,550 of uncollected | ||||||||
2014 taxes because of inability to locate the property owners. The tax bills have been referred to the legal | ||||||||
department for further action. | ||||||||
F. The Reed City Central Law Enforcement Building [(C) above] is completed. Contracts and expenses | ||||||||
total $989,000, and all have been paid and recorded in the Capital Project Fund. Prepare entries to close | ||||||||
this project and record the completion of the project in all other funds or account groups affected. Any | ||||||||
balance in the Capital Project Fund is to be applied to payment of interest and principal of the bond | ||||||||
issue. | ||||||||
G. On May 1, 2015, Hopi City supervised the issue of 6% serial bonds at par to finance street curbing in | ||||||||
an area recently incorporated in the city limits. The face amount of the bonds is $600,000; interest is | ||||||||
payable annually, and bonds are to be retired in equal amounts over five years from collections from | ||||||||
assessments against property owners. The City acts as a collection agent and has given assurances to | ||||||||
the debt holders that it will guarantee payment of principal and interest even though it is not obligated to | ||||||||
do so. | ||||||||
(1) Record the issuance of the bonds on May 1, 2015. | ||||||||
(2) Record the payment to bondholders on May 1, 2016. | ||||||||
H. The curbing project in (G) above was completed on November 30 at a total of $590,000. Record summary entries | ||||||||
for expenditure transactions May 1November 30, 2015, and on completion of the project. | ||||||||
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