Author Question: (Basic journal entries for acquisition of capital assets through issuance of debt) Prepare ... (Read 299 times)

karateprodigy · **on:** Jul 5, 2018

(Basic journal entries for acquisition of capital assets through issuance of debt)

Prepare entries to record the following transactions related to acquisition of capital assets by a county. The county does not use encumbrance accounting.

Identify the fund(s) used.

a. The county issues general obligation bonds in the amount of 900,000, receiving cash for the full face amount of the bonds. The cash will be used to buy capital assets.
b. The county buys a prefabricated building for 750,000, using part of the bond proceeds. The building is delivered and the invoice for the building is approved.
c. The invoice approved in b. is paid.
d. The General Fund transfers cash of 55,000 to another fund in anticipation of the payment of the first installment of interest (30,000) and principal (25,000) on the debt.
e. The first installment of debt service on bonds issued in a. becomes due and payable.
f. Debt service on the bonds issued in a. is paid.

Question 2

Which of the following is not a database model discussed in Chapter 5:
a. Relational
b. Hierarchical
c. Network
d. Physical

ntsoane kedibone · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

a. CPF
Cash 900,000
Other financing source long-term debt issued 900,000

b. CPF
Expenditures - building 750,000
Vouchers payable 750,000

c. CPF
Vouchers payable 750,000
Cash 750,000

d. GF
Transfer out to Debt Service Fund 55,000
Cash 55,000

DSF
Cash 55,000
Transfer in from General Fund 55,000

e. DSF
Expenditures - bond principal 25,000
Expenditures - interest 30,000
Matured bonds payable 25,000
Matured interest payable 30,000

f. DSF
Matured bonds payable 25,000
Matured interest payable 30,000
Cash 55,000

Answer to Question 2

D