Reference no: EM131525616

Question: Assume at the beginning of 2012, the Ashlawn Village Street and Highway Fund (a special revenue fund) has cash of $300,000 offset by assigned fund balance in the same amount.

1. During the year, the State notified the Village that $450,000 for the street and highway fund will be awarded for work performed on several bridges over the next two years. The grant is a cost reimbursement arrangement (no budget entry is necessary).

2. During the year, the Village signed contracts for bridge repairs that amounted to $340,000.

3. The bridge repairs were completed and an invoice was received for $333,000, of which $320,000 was paid in cash.

4. The special revenue fund reimbursed the General Fund for a payment the General Fund made on behalf of the Street and Highway Fund in the amount of $7,000. This amount is not related to the bridge repairs under the state grant.

5. The state government paid the Village $300,000 on work completed under the grant before year-end.

a. Prepare the journal entries for the above transactions. Prepare Closing entries for year-end.

b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the Special Revenue Fund.

c. Prepare a Balance Sheet.