Transaction Analysis

Instructions:

• Analyze the effects of the following transactions on the accounting equations of a state or local government's various fund and nonfund accounts. (Include any required year-end interest accruals for any borrowing transactions in your responses.)
• Indicate how each transaction would be reflected in the statement of operations for each affected fund. Identify both the fund and the operating statement.
  • A government incurred and paid salaries totaling $500,000 for general government employees.
  • The government purchased a truck for $38,000 in cash for a general government department using restricted taxation that can only be used to fund the department's programs.
  • A government issued $5,000,000 in 10-year, 6% bonds to assist in financing the expansion of a facility utilized by one of its public utility operations. The bonds were issued at par three months before the end of the year and pay annual interest.
  • The government issued a $50,000, nine-month, 10% note due in nine months. The note was issued six months prior to the end of the fiscal year to finance a variety of programs that are primarily supported by general tax revenues.
  • A government issued $15 million in general obligation bonds at par to finance the construction of a new school. The bonds carry an annual interest rate of 8% and were dated and issued six months before the end of the year.
  • The government spent $185,000 on land for the school's location.
  • The government incurred and paid $14,715,000 in construction expenses for the school building that was completed during the year.
  • The governing body of the government mandated that unutilized school bond proceeds be set aside for paying principal and interest on the bonds, and these funds were placed in the appropriate fund.
  • The fund received $1,500,000 in general tax revenues to be used to pay the principal and interest on the education bonds.
  • The first annual interest payment was due and paid on the school bonds.
  • When due, the nine-month note (from item 4) was repaid with interest.
  • The government-owned utility sold $1 million in services to the public on account; no bad debts are anticipated.
  • The government-owned utility sold $110,000 worth of services to other government agencies. Other departments have paid everything except $10,000.
  • The government sold a computer to the police department for $4,000. It originally cost $15,000 three years ago. At the time of purchase, it was anticipated that the computer would be utilized for four years and have a residual value of $7,000.
  • The government repaid the principal and interest on a long-term note totaling $100,000 and $10,000 in mid-year.