Question

Prepare journal entries for a local government to record the following transactions, first for fund financial statements and then for government-wide financial statements. A.The government sells $900,000 in bonds at face value to finance construction of a warehouse. B. A $1.1 million contract is signed for construction of the warehouse. The commitment is

Prepare journal entries for a local government to record the following transactions, first for fund financial statements and then for government-wide financial statements.
A.The government sells $900,000 in bonds at face value to finance construction of a warehouse.
B. A $1.1 million contract is signed for construction of the warehouse. The commitment is required, if allowed.
C. A $130,000 transfer of unrestricted funds was made for the eventual payment of the debt in (a).
D. Equipment for the fire department is received with a cost of $12,000. When it was ordered, an anticipated cost of $11,800 had been recorded.
E. Supplies to be used in the schools are bought for $2,000 cash. The consumption method is used.
F. A state grant of $90,000 is awarded to supplement police salaries. The money will be paid to reimburse the government after the supplement payments have been made to the police officers.
G.Property tax assessments are mailed to citizens of the government. The total assessment is $600,000, although officials anticipate that 4 percent will never be collected. There is an enforceable legal claim for this money and the government can use it immediately.

Answer 1

Local government transactions are recorded both in fund financial statements and government-wide financial statements, with differences in accounting practices. The specifics of recording bonds, contracts, fund transfers, grant receipts, and tax levies vary between the two types of statements.

Step-by-step explanation:

Journal Entries for Government Transactions

When recording transactions for a local government, the journal entries for fund financial statements and government-wide financial statements must be differentiated. Fund financial statements focus on specific government functions and adhere to a modified accrual basis of accounting, while government-wide financial statements provide an overview of the government's overall financial position, using full accrual accounting.

Example Entries

For instance, when a government sells bonds to finance construction, the entry would increase cash and liabilities in both sets of statements, but nuances in presentation may differ. Commitments for construction contracts do not immediately affect the financial statements until the related expenses are incurred. Transfers of funds, purchase of equipment, and acquisition of supplies follow specific fund accounting rules and would be recorded differently in each set. Receiving grants, levying property taxes, and anticipating uncollectible amounts are also uniquely treated in fund versus government-wide statements.

It is important to note that while fund financial statements tend to show current financial resources, government-wide statements provide a long-term financial perspective. To exemplify, recognizing capital assets and long-term debt occurs in government-wide statements but may not be shown in fund statements. Governments must reconcile these differences to provide comprehensive financial information to stakeholders, policymakers, and the public.