Chapter 12, Problem 30P

a.

To determine

Record the journal entries when the landfill is treated as an enterprise fund.

Explanation of Solution

Journal entries on the government wide- financial statement of H, when landfill is treated as enterprise fund.

Date	Account Title and Explanation	Post Ref.	Debit    ($)	Credit     ($)
31-12-2015	Expense – landfill closure		57,000
	Landfill closure liability			57,000
	(To record the landfill expense for the current year)
31-12-2015	Landfill closure liability		50,000
	Cash			50,000
	(To record the payment of landfill expense)
31-12-2016	Expense – landfill closure		132,000
	Landfill closure liability			132,000
	(To record the landfill expense for the current year)
31-12-2016	Landfill closure liability		50,000
	Cash			50,000
	(To record the payment of landfill expense)

Table: (1)

Working notes:

• Year 1:

$\begin{array}{c}\text{Expense = Total landfill cost x Capacity reached}\\ \text{= (\$1,200,000+\$7,000,000) x 3\%}\\ \text{= \$57,000}\end{array}$

• Year 2:

$\begin{array}{c}\text{Expense = Total landfill cost x Capacity reached - Last year expense}\\ \text{= (\$1,400,000+\$7,000,000) x 9\% -57,000}\\ \text{= \$132,000}\end{array}$

b.

To determine

Record the journal entries when the landfill is treated as a journal fund.

Explanation of Solution

Journal entries on the government wide- financial statement of H, when landfill is treated a journal fund.

Date	Account Title and Explanation	Post Ref.	Debit    ($)	Credit     ($)
31-12-2015	Expense – landfill closure		57,000
	Landfill closure liability			57,000
	(To record the landfill expense for the current year)
31-12-2015	Landfill closure liability		50,000
	Cash			50,000
	(To record the payment of landfill expense)
31-12-2016	Expense – landfill closure		132,000
	Landfill closure liability			132,000
	(To record the landfill expense for the current year)
31-12-2016	Landfill closure liability		50,000
	Cash			50,000
	(To record the payment of landfill expense)

Table: (2)

Working note:

• Year 1:

$\begin{array}{c}\text{Expense = Total landfill cost x Capacity reached}\\ \text{= (\$1,200,000+\$7,000,000) x 3\%}\\ \text{= \$57,000}\end{array}$

• Year 2:

$\begin{array}{c}\text{Expense = Total landfill cost x Capacity reached - Last year expense}\\ \text{= (\$1,400,000+\$7,000,000) x 9\% -57,000}\\ \text{= \$132,000}\end{array}$

c.

To determine

Record the journal entries when the landfill is treated as an enterprise fund.

Explanation of Solution

Journal entries on the fund financial statement of H, when landfill is treated an enterprise fund.

Date	Account Title and Explanation	Post Ref.	Debit    ($)	Credit     ($)
31-12-2015	Expense – landfill closure		57,000
	Landfill closure liability			57,000
	(To record the landfill expense for the current year)
31-12-2015	Landfill closure liability		50,000
	Cash			50,000
	(To record the payment of landfill expense)
31-12-2016	Expense – landfill closure		132,000
	Landfill closure liability			132,000
	(To record the landfill expense for the current year)
31-12-2016	Landfill closure liability		50,000
	Cash			50,000
	(To record the payment of landfill expense)

Table: (3)

Working notes:

• Year 1:

$\begin{array}{c}\text{Expense = Total landfill cost x Capacity reached}\\ \text{= (\$1,200,000+\$7,000,000) x 3\%}\\ \text{= \$57,000}\end{array}$

• Year 2:

$\begin{array}{c}\text{Expense = Total landfill cost x Capacity reached - Last year expense}\\ \text{= (\$1,400,000+\$7,000,000) x 9\% -57,000}\\ \text{= \$132,000}\end{array}$

d.

To determine

Record the journal entries when the landfill is treated as a journal fund.

Explanation of Solution

Journal entries on the fund financial statement of H, when landfill is treated a journal fund.

Date	Account Title and Explanation	Post Ref.	Debit    ($)	Credit     ($)
31-12-2015	Expenditures – landfill closure		50,000
	Cash			50,000
	(To record the payment of landfill closure)
31-12-2016	Expenditures – landfill closure		50,000
	Cash			50,000
	(To record the payment of landfill closure)

Table: (4)