Government‐wide statements report on assets and liabilities that are denied recognition on funds statements. Entrepreneurs Consultants, a state agency, was established to provide consulting services to small businesses. It maintains only a single general fund and accounts for its activities on a modified accrual basis. During its first month of operations, the association engaged in, or was affected by, the following transactions and events: It received an unassigned grant of $100,000. It purchased five computers at $2,000 each. It paid wages and salaries of $6,000. It borrowed $24,000 from a bank to enable it to purchase an automobile. It gave the bank a long‐term note. It purchased the automobile for $24,000. It made its first payment on the note—interest of $200. It destroyed one of its computers in an accident. The computer was not insured. Prepare journal entries in the general fund to record each of the transactions or other events. Prepare a balance sheet and a statement of revenues and expenditures for the general fund. Prepare a government‐wide statement of net position (balance sheet) and statement of activities. These should be on a full accrual basis. Assume that the capital assets have a useful life of five years and that no depreciation is to be charged on the computer that was destroyed.

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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Government‐wide statements report on assets and liabilities that are denied recognition on funds statements.

Entrepreneurs Consultants, a state agency, was established to provide consulting services to small businesses. It maintains only a single general fund and accounts for its activities on a modified accrual basis.

During its first month of operations, the association engaged in, or was affected by, the following transactions and events:

It received an unassigned grant of $100,000.
It purchased five computers at $2,000 each.
It paid wages and salaries of $6,000.
It borrowed $24,000 from a bank to enable it to purchase an automobile. It gave the bank a long‐term note.
It purchased the automobile for $24,000.
It made its first payment on the note—interest of $200.
It destroyed one of its computers in an accident. The computer was not insured.
1. Prepare journal entries in the general fund to record each of the transactions or other events.
2. Prepare a balance sheet and a statement of revenues and expenditures for the general fund.
3. Prepare a government‐wide statement of net position (balance sheet) and statement of activities. These should be on a full accrual basis. Assume that the capital assets have a useful life of five years and that no depreciation is to be charged on the computer that was destroyed.

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