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    The Sherill Utility District was recently established. Here is its balance sheet, after one year.

    Sherill Utility District Balance Sheet as of End of Year 1 (in millions) (see attached file for data)

    Note the following additional information:
    a. The general fund received all of its revenue, $150 million, from taxes (all collected). It had operating expenditures, excluding transfers to other funds, of $100 million (all paid for).
    b. The general fund transferred $20 million to the debt service fund. Of this, $15 million was to repay the principal on bonds outstanding; $5 million was for interest.
    c. The district issued $130 million in bonds to finance construction of plant and equipment. Of this, it expended $40 million.

    1. Prepare journal entries to summarize these activities in the appropriate funds. You need not make closing entries. Do not be concerned as to the specific titles of accounts to be debited or credited (e.g., whether a transfer from one fund to another should be called a "transfer," an "expense" or an "expenditure," or whether proceeds from bonds should be called "bond proceeds" or "revenues.")
    2. Comment on how the district's government-wide (full accrual) statement of net assets would differ from the balance sheet presented.

    See attached file for full problem description.

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    Following are journal entries:
    a. The general fund received all of its revenue, $150 million, from taxes (all collected). It had operating expenditures, excluding transfers to other funds, of $100 million (all paid for).
    a) General Fund Dr. $ 150
    To Revenue Taxes Recd.A/C $ 150
    Operating Expenses A/C Dr. $100
    To General Fund A/C $100

    b. The general fund transferred $20 million to the debt service fund. Of this, $15 million was to repay the principal on bonds outstanding; $5 million was for interest.
    b) Debt Service Fund Dr. $ 20
    To General Fund $ 20
    c. The district issued $130 million in bonds to finance construction of plant and equipment. Of this, it expended $40 million.
    c) Capital Projects A/C Dr. $ 130
    To Bonds A/C $ 130
    Construction of Plant A/C Dr. $40
    To Capital Projects A/C $40
    The entries are based on general principals of transactions in all types of accounts that is nominal, real and expenses/income accounts

    Q. Comment on how the district's ...

    Solution Summary

    This solution provides explanations regarding governmental accounting.

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