Reference no: EM132449476

Scenario A: Budgeted and Actual Debt Service Transactions

• Rainbow City is authorized to issue $10,000,000 4% regular serial bonds in 20x0 for the construction of a new police station. The bonds mature in equal annual amounts beginning on January 1, 20X1, for 10 years and pay interest on January 1 and July 1. The funds to pay the interest will be transferred from the General Fund. The city's fiscal year is December 31.

Required:

1. Prepare the budgetary entries for 20X0 assuming that the bonds were scheduled to be issued on January 2. Assume that the January 1, 20X1 principal and interest payments will be included in the 20X1 budget.
2. The bonds were sold on February 1, 20X0 at 101. Prepare the journal entries needed to record issuance of the bonds, including entries required in the Debt Service Fund and any entries required in the government activities general ledger at the government-wide level.
3. Prepare the entry required to reflect the transfer of funds from the General Fund to the Debt Service Fund.
4. Prepare the journal entries needed to record the first interest payment made on July 1, including the entries required in the Debt Service Fund and any entries required in the Governmental Activities general ledger at the government-wide level. Assume that the straight-line method is used for premium amortization.

Scenario B: Capital Assets Acquired Under Lease Agreements

• Tangerine County needs a new county court house but does not have current funding available. Accordingly, the county entered into a lease agreement with Surf City Builders whereby the Builders would construct a new court house and lease it to the county for 30 years. The fair market value of the building is $15 million. Using a 6% interest rate, the county has agreed to make an initial payment of $1,028,050 and annual payments in the same amount at the beginning of each of the remaining 29 years. The lease includes a funding clause, which allows Tangerine County to terminate the lease agreement if the government does not appropriate funds for the lease payments, but the county does not intend to exercise the option unless there is a financial emergency. Upon completion, the building had an appraised value of $17 million and a 40-year useful life.

Required:

1. Provide the journal entries the county should make in both the Capital Projects Fund general journal and the Governmental Activities general journal to record the lease at the date of inception.
2. Which financial statement(s) prepared at the end of the first year would show both the assets and the liability related to this capital lease?
3. Prepare journal entries in an Excel spreadsheet.

Scenario C: Recording and Reporting Entries

• Save the Turtles is a non-for-profit organization that was incorporated in 20X0 and has a December 31 year end. Save the Turtles had the following transactions during 20X0.

• Volunteers donated $20,000 in time to help with answering the phones, mailing materials, and other clerical activities.
• A business donated rent-free office space to the organization that would normally rent for $35,000 per year.
• Office furniture worth $10,600 and with an estimated 10-year life was donated to the organization.
• A fund drive raised $215,000 in cash and $100,000 in pledges that will be paid within one year. A state government grant of $50,000 was received for program operating costs.
• Save the Turtles paid salaries and fringe benefits of $208,560 during the year and had $22,400 of accrued salaries and benefits at the end of the year.
• Utilities expense for the year totaled $8,300 and other expenses for the year included $5,600 for telephone, $4,300 for supplies, and $14,200 for printing. There were no supplies remaining at the end of the year and accounts payable totaled $4,400.
• Office equipment with a useful life of 5 years was purchased for $12,000.
• assets.
• Ninety percent of pledges for 20X1 are estimated to be collectible.
• Expenses were allocated to program services and support services in the following percentages: Public education-45%, Veterinary services-20%, Management and general-20%, Fundraising-15%.

Required:

1. Make all necessary journal entries to record these transactions.
2. Prepare a schedule of expenses by nature and function for the year ended December 31, 20X0.
3. Show calculations for all questions.
4. Support writing portion of the assignment with credible sources.
5. Use terms, evidence, and concepts from class readings, including professional business language.
6. Review the Portfolio Project grading rubric for more information on expectations and how you will be graded.