Concept explainers
Concept Introduction:
Accounting treatment of Public Universities transactions:
GASB Statement No. 35 for public colleges and universities are required to is the guidance for special purpose governments engaged in business-type activities, the day to day activities of public universities are recorded in current funds which consists of self-balancing sub-funds. The restricted current fund accounts for those resources available only for an externally specified purpose. The plant fund account for capital assets and for resources to be used to acquire additional capital assets related to capital assets.
To prepare:

Answer to Problem 19.5P
- Entry $22,000,000 bond floated at par
- Entry when construction of computer complex $5,000,000
- Mandatory transfer of $385,000 has been made
- Half yearly interest on bonds payment transferred on 31 December
- Construction of complex completed with additional cost of $17,000,000
- Cost of complex is transferred
- Construction of complex completed with additional cost of $17,000,000
- Payment made for bond principal $2,000,000 and interest $770,000
- Land and building received appraised at Land $200,000 building $350,000
- Payment on Mortgage on property $90,000
- Donation of $100,000 received for acquisition of first edition
- Donation of $100,000 received for acquisition of first edition
Debit $ | Credit $ | |
Cash | 22,000,000 | |
Bonds payable | 22,000,000 |
Interest on bond payable
Debit $ | Credit $ | |
Expenses − Interest on bonds | 770,000 | |
Interest on bond payable | 770,000 |
Debit $ | Credit $ | |
Construction in progress | 5,000,000 | |
Contracts payable | 5,000,000 |
Half yearly interest on bonds payment transferred
Debit $ | Credit $ | |
Interest on bonds payable | 770,000 | |
Cash | 770,000 |
Debit $ | Credit $ | |
Contract payable | 3,85000 | |
Cash | 3,85000 |
Debit $ | Credit $ | |
Expenses Interest on bonds | 770,000 | |
Interest on bond payable | 770,000 |
Debit $ | Credit $ | |
Construction in progress | 17,000,000 | |
Contract payable | 1,000,000 | |
Cash | 16,000,000 |
Debit $ | Credit $ | |
Building | 22,000,000 | |
Construction in progress | 22,000,000 |
Debit $ | Credit $ | |
Bonds payable | 2,000,000 | |
Interest on bonds payable | 770,000 | |
Contracts payable | 2,770,000 |
Debit $ | Credit $ | |
Contract payable | 2,770,000 | |
Cash | 2,770,000 |
Debit $ | Credit $ | |
Land | 200,000 | |
Building | 350,000 | |
Revenue − Unrestricted property contribution | 550,000 |
Debit $ | Credit $ | |
Mortgage payable | 90,000 | |
Cash | 90,000 |
Pledge receivable for remodelling the building
Debit $ | Credit $ | |
Contribution receivable | 100,000 | |
Revenue − Unrestricted contribution | 100,000 |
Pledge uncollectable
Debit $ | Credit $ | |
Expenses institutional support (provision for uncollectable contribution) | 5,000 | |
Allowance for Uncollectable contribution | 5,000 |
Debit $ | Credit $ | |
Cash | 100,000 | |
Revenue − Temporarily restricted contribution | 100,000 |
Debit $ | Credit $ | |
Library books | 160,000 | |
Cash | 100,000 | |
Accounts payable | 60,000 |
Explanation of Solution
- The above entry can be explained receipts form bond floatation received and credited to bond payable accounts and accrued interest has been recognized.
- Construction begins hence amount recognised as entry for construction in progress account has been recognised.
- Construction begins mandatory transfer of 3,85000 has been made and interest for December 31 has been recognized
- Bond interest payable on December 31 has been paid
- Bond interest payable on December 31 has been paid
- Bond interest payable on December 31 has been paid
- Bond redemption has been carried out for $2,000,000 and interest on bonds due on the date has been paid.
- Bond redemption and Bond interest payable is recognized
- Property gifted is treated as revenue unrestricted and mortgage has been assumed.
- Pledges are the promised contributions which are recognized and a provision for uncollectable pledges have been created
- Temporarily restricted contribution received for acquisition of first addition
- First addition purchased and payment made on the same was recorded.
Want to see more full solutions like this?
Chapter 19 Solutions
ADVANCED ACCOUNTING
- A machine costing $77,500 with a 5-year life and $4,700 residual value was purchased January 2. Compute depreciation for each of the 5 years, using the double-declining-balance method. Year1 Y2 Y3 Y4 Y5arrow_forwardSolare Company acquired mineral rights for $536,800,000. The diamond deposit is estimated at 48,800,000 tons. During the current year, 3,390,000 tons were mined and sold. Required: 1.Determine the depletion rate. 2. Determine the amount of depletion expense for the current year. 3.Journalize the adjusting entry to recognize the depletion expense. Refer to the Chart of Accounts for exact wording of account titles. _____________ Debit / Credit _____________ Debit / Crditarrow_forwardExercise 1-24 (Algo) Linking the statement of owner's equity and balance sheet LO P2 Mahomes Company reported the following data at the end of its first year of operations on December 31. Cash Accounts receivable Equipment Land Accounts payable Owner investments Mahomes, Withdrawals Net income $ 15,500 16,500 18,500 62,500 12,500 62,500 31,500 69,500 (a) Prepare its year-end statement of owner's equity. Hint. Mahomes, Capital on January 1 was $0. (b) Prepare its year-end balance sheet, using owner's capital calculated in part a. Complete this question by entering your answers in the tabs below. Required A Required B Prepare its year-end statement of owner's equity. Hint: Mahomes, Capital on January 1 was $0. Cash MAHOMES COMPANY Statement of Owner's Equity For Year Ended December 31arrow_forward
- ht = ences X On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $84,920 in assets to launch the business. On December 31, the company's records show the following items and amounts. Cash withdrawals by owner Consulting revenue Salaries expense Cash $ 8,450 Accounts receivable 16,950 Office supplies 4,080 Rent expense Land 46,020 Office equipment 18,860 Telephone expense Accounts payable 9,280 Owner investments 84,920 Miscellaneous expenses $ 2,930 16,950 4,420 7,900 860 680 Exercise 1-18 (Algo) Preparing an income statement LO P2 Using the above information prepare a December income statement for the business. ERNST CONSULTING Income Statement Revenues Rent expense Salaries expense Telephone expense Total revenues $ 4,420 7,900 860 $ SA Assets Cash 8,450 Accounts receivable 16,950 Office supplies 4,080 Land 46,020 Office equipment 18,860 navable 9,280 13,180 5 11 of 14 Next >arrow_forwardEquipment was acquired at the beginning of the year at a cost of $77,220. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,560. P1 What was the depreciation expense for the first year? _______ P2 Assuming the equipment was sold at the end of the second year for $58,320, determine the gain or loss on sale of the equipment. $_______________ P3 Journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles. 1. ____ Debit / Credit 2.____ Debit / Credit 3.____ Debit / Credit 4.____ Debit / Creditarrow_forwardUse the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $84,920 in assets to launch the business. On December 31, the company's records show the following items and amounts. Cash Accounts receivable Office supplies Land Office equipment Accounts payable Owner investments $ 8,450 Cash withdrawals by owner 16,950 4,080 Rent expense Consulting revenue Salaries expense 18,860 Telephone expense Miscellaneous expenses 46,020 9,280 84,920 $ 2,930 16,950 4,420 7,900 860 680 Check my work Exercise 1-21 (Algo) Preparing a statement of cash flows LO P2 Also assume the following: a. The owner's initial investment consists of $38,900 cash and $46,020 in land. b. The company's $18,860 equipment purchase is paid in cash. c. Cash paid to employees is $2,700. The accounts payable balance of $9,280 consists of the $4,080 office supplies…arrow_forward
- ht = ences X On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $84,920 in assets to launch the business. On December 31, the company's records show the following items and amounts. Cash withdrawals by owner Consulting revenue Salaries expense Cash $ 8,450 Accounts receivable 16,950 Office supplies 4,080 Rent expense Land 46,020 Office equipment 18,860 Telephone expense Accounts payable 9,280 Owner investments 84,920 Miscellaneous expenses $ 2,930 16,950 4,420 7,900 860 680 Exercise 1-18 (Algo) Preparing an income statement LO P2 Using the above information prepare a December income statement for the business. ERNST CONSULTING Income Statement Revenues Rent expense Salaries expense Telephone expense Total revenues $ 4,420 7,900 860 $ SA Assets Cash 8,450 Accounts receivable 16,950 Office supplies 4,080 Land 46,020 Office equipment 18,860 navable 9,280 13,180 5 11 of 14 Next >arrow_forwardAssets Current Assets Cash Credit card receivables Accounts receivable Marketable securities Food Inventories Prepaid expenses Total Current Assets Golden Bay Balance Sheet as at December 31 Year 2018 Year 2019 $ 18,500 9,807 $ 29,400 11,208 5,983 6,882 15,400 2,000 12,880 14,700 10 800 14 900 73370 79 090 Property Plant & Equipment Land Building Equipment Furnishings $ 60,500 828,400 114,900 75,730 (330,100) 16 600 766 030 839 400 $ 60,500 884,400 157,900 81,110 (422,000) 18 300 7 80 210 859 300 Net: Accumulated depreciation China, glass, silver, & linen Total Assets Liabilities & Stockholders' Equity Current Liabilities Accounts payable Accrued expenses payable Taxes payable Current mortgage payable Total Current assets $ 19,200 4,200 12,400 26 900 62 700 $16,500 5,000 20,900 26 000 68 400 Long-term liabilities Mortgage payable Total Liabilities $ $512 800 $486 400 575 500 $555 200 Stockholders' Equity Common stock ($5 par. 40,000 shares issued & OS) $200,000 Retained earnings…arrow_forwardMat lives in Barbados and is desirous of starting his own business from inheritances that his parents left him. He approached you for advice on the best type of business to register. Mr. Mat said he would love to gain benefits from any tax relief that is available that the government has to offer. Give advice to Mr. Mat whether it would be more beneficial to start a Company or an Individual Trading Business. outline for Mr. Mat why setting up either a company, or a trading as business is more advantageous over the other. cover matters like: Tax rates, Available tax reliefs and or tax credits Ease of operations of a company, as well as ease of operations of an individual trading business.arrow_forward
- Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning

