Answered: a. Prepare journal entries needed to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Preparation of journal entries for government-wide financial statements and preparation of government-wide financial statements The following additional information is furnished to complete this part of the problem. Croton has no activities other than governmental activities. The city’s government-wide statement of net position for the year ended December 31, 2018, showed general capital assets of $14,000 and related accumulated depreciation of $6,400. Depreciation expense on Croton’s general capital assets for 2019 (including assets acquired in 2019) was $700, all of which was applicable to public safety. The city’s government-wide statement of net position for the year ended December 31, 2018, showed bonds payable of $5,500. All the debt had been issued to finance capital assets. Analysis of Croton’s debt service requirements showed that $700 of the total bonds payable as of December 31, 2019, should be reported as current because it is due to be paid during 2020. The city’s government-wide statement of net position for the year ended December 31, 2018, showed accrued interest payable of $120 on its outstanding long-term debt. Analysis of the city’s debt service requirements showed accrued interest payable of $135 on all outstanding long-term debt as of December 31, 2019, including the debt sold by the city during 2019. Croton’s government-wide statement of net position for the year ended December 31, 2018, showed accrued vacation pay of $75. Vacation leave records showed that, as of December 31, 2019, accumulated vacation leave had increased to $87, exclusive of the $10 due to be paid to retired police officers early in 2020. (Assume vacation leave applies only to the public safety function.) Use the preceding information to do the following: a. Prepare journal entries needed to convert the governmental funds financial statements to the governmental activities columns of the government-wide financial statements. Review and make adjustments for journal entries made in Chapter 5 and Chapter 6 portions of this problem for revenues—property taxes; deferred property tax revenue; other financing sources—long-term debt issued; expenditures—capital outlay; expenditures—bond principal; and transfers in and out. Then, record journal entries for 1 through 5 above. Post the journal entries in the six-column worksheet presented below. NOTE: The reference (Ref.) letters next to each journal entry are only provided to help you complete the worksheet that immediately follows.

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