Questions A and B ONLY

summary of the district 1. 's first-year transactions follows (all dollar amounts in millions). It levies t expects to collect the remaining $50 shortly after 2. used. It incurs $240 in general operating expenditures, of which it pays $170 It issues long-term bonds of $500. The bonds must be 3. used to finance the acquisition of recreational es. Accordingly, they are recorded in a restricted fund-the capital projects fund. The capital projects fund is a government not recognize long-term debt as an obligation. Therefore, the infow of resources is accounted for as al fund. As such, it is not accounted for on a full accrual basis. It does d proceeds," an account that, like a revenue, increases fund balance. The account is classified as "o oiner hnancing sources" in a statement of revenues, expenditures, and changes in fund balances to distinguish it from operating revenues. 4. The district acquires $400 of recreational facilities using the resources available in the capital projects fund. Just as the capital projects fund recognizes the bond proceeds similarly to a revenue, so too it records the acquisition of the equipment as an expenditure. 5. The bond indenture (agreement) requires that the district periodically commit funds to repay the principal of the debt. The district transfers $40 from the general fund to the fund specially created to account for resources restricted for debt service: This transaction must be recorded in the two affected independent accounting entities, the general fund and the debt service fund. The repair service, which is accounted for in an internal service fund, acquires $10 of equipment, giving a long-term note in exchange. Internal service funds are proprietary funds and as such are accounted for as if they were businesses. They are accounted for on a full accrual basis; they focus on all economic resources. Hence they recognize both long-term assets and long-term obligations 6. The repair service bills the district's other departments $15 and collects the full amount in cash. The other departments are all accounted for in the general fund. The service incurs cash operating expenses of $12 and recognizes $2 of depreciation. a. Prepare appropriate journal entries to record the transactions in individual funds. Governmental 7 accrual basis funds are accounted for on a modified accrual basis; proprietary funds on a full b. Based on the entries, prepare for the governmental funds a balance sheet and a statement of reve nues, expenditures, and changes in fund balances