The following information relates to three grants that the town of College Hills received from the state during its fiscal year ending December 31, 2003:
a. A cash grant of $200,000 must be used to repair roads.
b. $150,000 in cash is received out of a total grant of $200,000 intended to reimburse the town for actual expenditures incurred in repairing roads. During the year, the town incurred $150,000 in allowable repair costs.
c. A cash entitlement grant of $200,000 is intended to supplement the town's 2004 budget and must be expended in that year.
1. Prepare journal entries to record the three grants in a governmental fund.
2. What amount of revenue would be reported for each grant in the town's government-wide statement of activities for 2003? Where on that statement would these revenues be most likely to be reported?
The Solution is as following:
Q1.a) CASH A/C Dr $ 200,000
To Cash Grant A/c 200,000
b) Road Repairs A/C Dr. $150,000
The solution prepares journal entries for three grants that were given to the town of College Hills.