Chapter 11, Problem 42P

Chesterfield County had the following transactions. Prepare the entries first for fund financial statements and then for government-wide financial statements.

1. a. A budget is passed for all ongoing activities. Revenue is anticipated to be $834,000 with approved spending of $540,000 and operating transfers out of $242,000.
2. b. A contract is signed with a construction company to build a new central office building for the government at a cost of $8 million. A budget for this project has previously been recorded.
3. c. Bonds are sold for $8 million (face value) to finance construction of the new office building.
4. d. The new building is completed. An invoice for $8 million is received and paid.
5. e. Previously unrestricted cash of $1 million is set aside to begin paying the bonds issued in (c).
6. f. A portion of the bonds comes due and $1 million is paid. Of this total, $100,000 represents interest. The interest had not been previously accrued.
7. g. Citizens’ property tax levies are assessed. Total billing for this tax is $800,000. On this date, the assessment is a legally enforceable claim according to the laws of this state. The money to be received is designated for the current period, and 90 percent is assumed to be collectible in this period with receipt of an additional 6 percent during subsequent periods but in time to be available to pay current period claims. The remainder is expected to be uncollectible.
8. h. Cash of $120,000 is received from a toll road. This money is restricted for highway maintenance.
9. i. The county received investments valued at $300,000 as a donation from a grateful citizen. Income from these investments must be used to beautify local parks.

To determine

Prepare the entries first for fund financial statements and then for government-wide financial statements.

Explanation of Solution

The entries in the fund financial statements are as follows:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
a.	General Fund
	Estimated Revenue Control		834,000
	Appropriations control			540,000
	Estimated Other Financing Uses-Operating transfers			242,000
	Budgetary balance			52,000
	(being budget recorded along with spending)
b.	Capital project Fund
	Encumbrance Control		8,000,000
	Fund Balance-Reserved for encumbrances			8,000,000
c.	Capital project Fund
	Cash		8,000,000
	Other Financing sources control			8,000,000
d.	Capital project Fund
	Fund Balance-Reserved for Encumbrances		8,000,000
	Encumbrances Control			8,000,000
	Expenditures Control		8,000,000
	Contracts Payable			8,000,000
	Contracts Payable		8,000,000
	Cash			8,000,000
e.	General Fund
	Other Financing sources control		1,000,000
	Cash			1,000,000
	Debt Service Fund
	Cash		1,000,000
	Other Financing Resources			1,000,000
f.	Debt Service Fund
	Expenditures Control-Bonds		900,000
	Expenditures Control-Interest		100,000
	Cash			1,000,000
g.	General Fund
	Property Tax receivable		800,000
	Revenues-Property Tax			768,000
	Uncollectable Tax			32,000
h.	Special Revenue fund
	Cash		120,000
	Revenue Control			120,000
i.	Permanent Fund
	Investments		300,000
	Contribution revenue			300,000

Table: (1)

The entries in the government-wide financial statements are as follows:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
a.	Budgets are not reported in the government-wide financial statements
b.	Commitments are not recorded in the government-wide Financial Statements
c.	Cash		8,000,000
	bonds payable			8,000,000
d.	Buildings		8,000,000
	Cash			8,000,000
e.	Intra-entity activity transfers are not recorded in government-wide financial statements
f.	Bonds payable		900,000
	Interest expense		100,000
	Cash			1,000,000
g.	Property Tax receivable		800,000
	Revenues-Property Tax			768,000
	Uncollectable Tax			32,000
h.	Cash		120,000
	Revenue-Reserved for Highway Maintenance			120,000
i.	Investments		300,000
	Revenues-Donations			300,000

Table: (2)