Modified accrual accounting method for Phoenix City
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Show the impact of this transaction on the fundamental equation of accounting using modified accrual accounting method for Phoenix City.
Phoenix city is entitled to receive unrestricted grants from the state. During the year, grants in the amount of $100,000 were made. The total collections on grants were just $30,000. This 30,000 consisted of $20,000 that the state owed for the previous year and $10,000 for the current year's grant. The state will be paying the balance owed to the city within 15 days after the year ends.
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Solution Summary
Modified accrual accounting methods for phoenix city are examined.
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For governmental accounting using modified accrual accounting, the fundamental equation of accounting is: assets = liabilities + fund equity
The journal entries for the transactions are as follows:
1. Grants of $100,000 made - no entry made until the grant is available and measurable. In this case, it is measurable but not yet available.
2. Cash of $30,000 is received - debit Cash, credit Grant Revenue
- The $10,000 that relates to the ...
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