Advanced Accounting: Journal Entries
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Prepare all journal entries in all funds and the GCA and GLTL accounts to record the following transactions and events.
1. A state issued $50,000,000 of 4%, 20 year term bonds at 105 to provide financing for construction of a new state legislative office building. The premium which is to be used for debt service, was transferred to the appropriate fund. Bond issue costs of $75,000 were paid directly from the General Fund. The Bonds were issued on April 1, 20X1, and annual interest is due each March 31.
2. The state signed contracts for $55,000,000 for construction of the building. Costs incurred for construction of the office building during 20x1 amounted to $18,000,000 and all but 10% was paid.
3. Annual interest of $2,000,000 was paid on the bonds on March 31,20X2.
4. General Fund resources $5,000,0000 were transferred to the legislative office building capital Projects Fund during 20X2 for use on project.
5. The project was completed. Expenditures in 20X2 totaled $36,500,000 and all fund liabilities were paid. The remaining resources to be used for debt service were paid to the appropriate fund.
6. $3,300,000 was transferred from the general fund to service the bond in 20X3.
7. interest of $2,000,000 was paid on March 31, 20X3.
8. The bonds were retired on March 31 of 20Z1. Funds totaling $46,000,000 had been accumulated previously in the Debt Service Fund to retire the bonds; the remaining needed to retire the bonds and make the last $2,000,000 interest payment was transferred from the general Fund in 20Z1.
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Solution Summary
The solution assists with preparing journal entries.
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The tutorials are attached. In this assignment you are being asked to demonstrate not only your understanding of the basic concepts of government accounting particularly to the GCA GLTL accounts but also basic finance concepts.
Remember that GCA is used to account for purchases of capital asses and the sale of these assets which are recorded as other financing sources while GLTL is used to account for the issuance of debt which is recorded as other financing sources and the retirement of these debts which are recorded as expenditures of other financing uses.
Legend:
GCA = General Capital Asset account
GLTL = General Long-Term Liabilities account
DR = Debit
CR = Credit
TRANSACTION 1
GCA & GLTL accounts
DR Net Assets $52,425,000
DR Unamortized Bond Issue Cost $75,000
CR Bonds Payable $50,000,000
CR Premium on ...
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