General capital assets are accounted for differently in fund and government-wide financial statements. A city engaged in the following transactions during a year: It acquired computer equipment at a cost of $40,000.It completed construction of a new jail, incurring $245,000 in new costs. In the previous year the city had incurred $2.5 million in construction costs. The project was accounted for in a capital projects fund.It sold for $16,000 land that it had acquired three years earlier for $28,000.It traded in a four-year-old sanitation department vehicle for a new model. The old vehicle had initially cost $27,000, it carrying value at the time of trade was $17,000, and its market value was $13,000. The city paid an additional $39,000 cash for the new model. The fair value of the new model was $52,000.a. Prepare journal entries to reflect the transactions in an appropriate governmental fund (e.g., a general fund or a capital projects fund).b. Prepare journal entries to reflect the transactions in the city’s government-wide statements.

a. Transaction Account Titles Debit Credit 1 Expenditure - acquisition of computers $40,000…

Answered: General capital assets are accounted…

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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General capital assets are accounted for differently in fund and government-wide financial statements.

A city engaged in the following transactions during a year:

It acquired computer equipment at a cost of $40,000.
It completed construction of a new jail, incurring $245,000 in new costs. In the previous year the city had incurred $2.5 million in construction costs. The project was accounted for in a capital projects fund.
It sold for $16,000 land that it had acquired three years earlier for $28,000.
It traded in a four-year-old sanitation department vehicle for a new model. The old vehicle had initially cost $27,000, it carrying value at the time of trade was $17,000, and its market value was $13,000. The city paid an additional $39,000 cash for the new model. The fair value of the new model was $52,000.

a. Prepare journal entries to reflect the transactions in an appropriate governmental fund (e.g., a general fund or a capital projects fund).

b. Prepare journal entries to reflect the transactions in the city’s government-wide statements.

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