Author Question: A(n) system is the methods and procedures for collecting, classifying, summarizing and reporting ... (Read 110 times)

big1devin · **on:** Jul 5, 2018

A(n) system is the methods and procedures for collecting, classifying, summarizing and reporting abusiness's financial and operating information.
a. accounting
b. fiduciary
c. operations
d. auditing

Question 2

(Journal entries for an Enterprise Fund)

These transactions relate to Metro Bus, which provides transportation services to residents of Parker County. Metro Bus is accounted for as a County Enterprise Fund.

Make journal entries to account for the following 2013 transactions in the Enterprise Fund.
a. On April 1, 2013, Metro borrows 3,000,000 by issuing 10-year revenue bonds. Bond principal is to be paid back in 20 equal semi-annual installments, starting October 1, 2013, together with interest of 6 a year on the unpaid principal.
b. On July 1, Metro pays cash for 10 buses costing 150,000 each. Metro also pays cash for land costing 100,000 and a building costing 900,000 to house its repair activity.
c. On July 1, Metro invests 200,000 of unused cash in a Certificate of Deposit (CD).
d. Metro pays cash of 50,000 to acquire an inventory of repair parts.
e. Metro collects bus fares of 900,000, which it deposits in the bank.
f. Metro sends an invoice for 10,000 to the County Social Services Agency for taking senior citizens on bus tours. The Agency receives appropriations from the General Fund.
g. Metro pays salaries of 500,000 to its bus operators, mechanics, and administrative staff.
h. The CD (transaction c.) matures and Metro receives a check for 203,000
i. On October 1, 2013, Metro pays the first installment of principal and interest on the revenue bonds in transaction a.

To prepare financial statements at December 31, 2013, Metro makes adjusting journal entries for the following items:
j. To record six months' depreciation on the buses and building bought in transaction b. Estimated lives are: buses - 10 years; building - 30 years.
k. To record consumption of repair parts. A year-end physical inventory shows repair parts on hand amounting to 8,000 (See transaction d.)
l. To accrue for unpaid salaries of 12,000
m. To accrue interest on the revenue bonds outstanding at December 31, 2013 (See transactions a. and i.)

bigsis44 · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

a

Answer to Question 2

a. Cash 3,000,000
Revenue bonds payable 3,000,000

b. Buses 1,500,000
Land 100,000
Building 900,000
Cash 2,500,000

c. Investments 200,000
Cash 200,000

d. Repair parts inventory 50,000
Cash 50,000

e. Cash 900,000
Revenues - bus fares 900,000

f. Due from General Fund 10,000
Revenues - bus fares 10,000

g. Salaries expense 500,000
Cash 500,000

h. Cash 203,000
Investments 200,000
Investment revenue 3,000

i. Revenue bonds payable 150,000
Interest expense 90,000
Cash 240,000

(Note: Principal payment is 3,000,000 / 20 payments. Interest payment is based on 3,000,000 for 6 months at 6 percent per annum.)

j. Depreciation expense - buses 75,000
Depreciation expense - building 15,000
Accumulated depreciation - buses 75,000
Accumulated depreciation - building 15,000

(Note: Bus depreciation is 1,500,000 / 10 = 150,000; for 6 months, it is 75,