Question

A city orders a new computer for its General Fund at an anticipated cost of $93,000. Its actual cost when received is $94,460. Payment is subsequently made. a. Prepare all required journal entries for both fund and government-wide financial statements. (Select the appropriate fund for each situation when required. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

The Journal entries for the Fund based Financial Statement and the Government wide financial statement are in the explanation.

Step-by-step explanation:

Well, first there is the need to know that the Government Authority Standard Board mandates that government organisations keep two financial statements. The first is the Government-wide financial statement and the second is the fund-based financial statement.

The fund based Financial Statements- General Fund

S/N Description Debit ($) Credit ($)

1. Computer - Encumbrances Control 93,000

Outstanding Encumbrances 93,000

Being the payment for Computer received

2. Outstanding Encumbrances 93,000

Computer- Encumbrances control 93,000

Being the removal of encumbrance for received computer

3. Computer- Expenditures Control 94,460

Vouchers payable 94,460

Being the receipt of a new computer and its liability

4. Voucher Payable 94,460

Cash 94,460

Being the payment for the computer and its liability

It should be noted the encumbrance control account was created because the computer was received but payment was made at a later date.

Government Wide Financial Statement- Government Activities

S/N Description Debit ($) Credit ($)

1. There is no entry required to record the order of the computer

2. Computers 94,460

Vouchers Payable 94,460

Being the record of computers received and its liability

3. Voucher Payable 94,460

Cash 94,460

Being the record of payment made for the computer